The price of oil dropped sharply on Wednesday after reports that the US and Iran could be close to agreeing on a deal to end the war.
WTI oil, the US benchmark, was down 9.5% just before 6:30 a.m. ET to trade at $92.40 per barrel. Brent crude, the international benchmark, was 8.5% lower at $100.50 at the same time.
The drops came after Axios reported early on Wednesday morning, citing four anonymous sources, that Washington and Tehran are close to agreeing on a one-page memorandum of understanding to end the conflict, which began at the end of February.
Axios reported that while no deal has been formally signed, major progress could be made toward an agreement in the next 48 hours. Key points of the proposed deal include a gradual reopening of the Strait of Hormuz, the waterway that has been a focal point for much of the war.
Oil costs have skyrocketed worldwide since the US and Israel attacked Iran in late February. Iran retaliated by effectively closing the strait, which connects the Persian Gulf to the Indian Ocean and serves as a key shipping channel for oil and liquefied natural gas produced in the Gulf.
Prices have been highly volatile in recent months, swinging sharply on signs of escalations and de-escalations in the conflict. The surging price of oil since the war began has led to knock-on effects, such as a spike in gas prices at the pump and big increases in plane ticket prices due to a jump in aviation fuel costs.