Oil prices tumbled more than 10% on Monday as hopes for diplomacy between the US and Iran to be succesful reduced the geopolitical risk premium in crude markets.

International benchmark Brent crude traded at around $88.06 per barrel as of 1845GMT, down 10.4% from the previous close of $91.68.

US benchmark West Texas Intermediate also fell 8% to $82.35.

Brent briefly climbed to $100 per barrel last week amid concerns that disruptions to shipping through the Strait of Hormuz and the Bab el-Mandeb Strait could restrict Middle Eastern crude exports.

Prices retreated after US President Donald Trump paused military strikes on Iran on Friday following nearly two weeks of hostilities.

Trump on Monday said Washington was holding “good talks” with Tehran and that an agreement was possible, but warned that strikes could resume if negotiations failed.

Iran said it suspended retaliatory military operations and entered talks with Oman over navigation through the strait.

Supply conditions also improved after crude loadings resumed at the Caspian Pipeline Consortium terminal on Russia’s Black Sea coast, a major export route for Kazakh oil.

However, markets remained cautious after the Houthis claimed attacks on Saudi Aramco-linked facilities in Jizan and Yanbu. Neither the Saudi government nor Aramco confirmed the claims. (AA)