WTI crude futures fell nearly 6% to below $91 a barrel on Monday. Brent crude also slid more than 5% to trade below $98 a barrel. Diplomatic signals pointing toward a potential U.S.-Iran agreement triggered the decline.
Negotiations center on reopening the Strait of Hormuz and addressing Iran's nuclear program. The vital energy channel has been effectively closed since the conflict began in February. U.S. President Donald Trump reported that negotiations were proceeding nicely.
The geopolitical risk premium decreased as market optimism grew. Trading volumes remained thin due to market holidays in the U.S. and parts of Europe.
Iranian and U.S. officials clarified that a final deal is not imminent. An Iranian Foreign Ministry spokesman stated that key issues remain unresolved despite consensus on many topics. President Trump added that the U.S. will not rush into a bad deal.