Oil markets declined steeply on Wednesday as optimism over a potential agreement between the United States and Iran reduced fears of prolonged disruption.
Prices fell sharply amid expectations of eased tensions in the Strait of Hormuz.
West Texas Intermediate dropped nearly ten per cent in early trading before stabilising near $94.32 per barrel.
Brent crude declined seven per cent to approximately $102.14 per barrel. Later reports indicated Brent trading close to $103, while WTI hovered near $96 as sentiment improved.
Market momentum followed reports suggesting Washington and Tehran were nearing a memorandum of understanding.
The proposed agreement aims to end the conflict that began in late February.
Sources indicated significant progress could occur within forty-eight hours.
Donald Trump announced a pause in 'Project Freedom', a naval mission escorting commercial vessels through the region.
The US President stated that, if Iran accepts the proposal, hostilities would cease and maritime routes would reopen. He warned of intensified military action if negotiations fail.
Despite optimism, risks persist. Reports indicated that Iran's Revolutionary Guard Navy issued warnings to vessels, asserting that the waterway remains restricted.
Wang Yi engaged in diplomatic discussions with Seyed Abbas Araghchi in Beijing, urging stabilisation. China continues to remain a major importer of Iranian crude.
The conflict has elevated fuel costs significantly. Petrol prices in the United States reached $4.54 per gallon, while diesel climbed to $5.67, reflecting recent volatility.