Oil prices down over 9% after Pakistani source says US and Iran are close to framework peace deal

LONDON: Oil prices extended declines on ‌Wednesday, slumping to two-week lows after a Pakistani source said the United States and Iran were nearing an initial peace deal.

Brent crude futures fell $10.07, or 9.2%, to $99.80 a barrel by 1042 GMT, dropping below $100 for the first ​time since April 22. U.S. West Texas Intermediate lost $10.79, or 10.6%, to $91.48.

Both benchmarks ​were on track for their biggest daily declines in absolute terms in a ⁠month and hit their lowest in two weeks, having shed about 4% in the previous ​session.

A source from mediator Pakistan said the United States and Iran were closing in on an ​agreement on a one-page memorandum of understanding.

U.S. media outlet Axios reported that the U.S. expects Iranian responses on several key points in the next 48 hours, citing sources saying this was the closest the parties had ​come to an agreement since the war began.

Iran had said earlier that it would only ​accept a fair and comprehensive agreement.

U.S. President Donald Trump said on Wednesday ​that if Iran honors ‌what has been agreed to, the U.S.-Israeli war on ​Iran could end and ​the Strait of Hormuz reopen.

"Assuming ⁠Iran agrees to give ​what has been agreed to, ​which is, perhaps, a big assumption, the already legendary Epic ​Fury will be at ​an end, and the highly effective ‌Blockade ⁠will allow the Hormuz Strait to be OPEN TO ALL, including Iran. "If they ​don’t agree, ​the ⁠bombing starts, and it will be, sadly, ​at a much ​higher ⁠level and intensity than it was before," Trump said ⁠in a ​post on Truth ​Social.

The U.S. military said on Monday that it destroyed several Iranian small boats as part ‌of ⁠efforts to help stranded ships to exit the Strait of Hormuz.

On Tuesday, Trump unexpectedly ​said he would briefly pause an operation to help escort ships through the Strait of Hormuz, citing ​progress toward a comprehensive agreement with Iran, without giving details on the agreement.

Crude oil supply losses from halted marine traffic through the strait since the war began in February have driven up prices, with Brent trading last week at its highest since March 2022.

The Strait of Hormuz closure has ​resulted in a drawdown ​in global oil and ⁠fuel inventories as refineries try to offset production shortfalls.

U.S. crude oil inventories fell for a third week, while gasoline and distillate stocks also ​declined, market sources said on Tuesday, citing American Petroleum Institute figures.

Crude stocks ​fell by ⁠8.1 million barrels in the week ended May 1, the sources said. Gasoline inventories were down by 6.1 million barrels from a week earlier and distillate inventories fell by 4.6 million barrels, ⁠the sources ​said.