Oil prices fell by nearly 6% on Tuesday as renewed diplomatic engagement between the United States and Iran fueled expectations of an agreement to reopen the Strait of Hormuz, easing fears of potential disruptions to global oil supplies.

International benchmark Brent crude dropped to around $79 per barrel as of 1550 GMT, marking a decline of approximately 5.7% from its previous closing price of $83.77, The Caspian Post reports, citing Anadolu Agency.

The benchmark also slipped below the $80-per-barrel mark for the first time since July 13.

US benchmark West Texas Intermediate (WTI) crude fell about 5.9% to $75.60 per barrel, compared with its previous close of $80.34.

US Treasury Secretary Scott Bessent said Washington and Tehran were continuing negotiations and could reach an agreement as early as Tuesday or Wednesday to reopen the strategically important waterway.

“We are in talks with the Iranians,” Bessent told CNBC. “There is a chance we may have a deal today or tomorrow to open the strait and move towards a more normalized position in this conflict.”

However, Iranian Foreign Ministry spokesman Esmaeil Baghaei said Tehran was not engaged in direct negotiations with Washington. He added that discussions taking place through Omani mediation were focused on ensuring the safe passage of commercial vessels.

Qatar also stated that it remains in contact with both parties and that a proposed de-escalation plan is currently being circulated, although no specific timeline has been set for reaching an agreement.

Hopes for a possible ceasefire and the resumption of shipping through the Strait of Hormuz reduced the geopolitical risk premium that had pushed oil prices sharply higher during July.

Oil prices were also weighed down by OPEC+'s decision to move forward with its planned production increase of 188,000 barrels per day in September.