Global oil prices plunged sharply on Wednesday, with Brent crude falling about 11 per cent to below $100 per barrel, following growing optimism that the United States and Iran are nearing an agreement to end the ongoing Gulf war.

The decline came as Iran said it was reviewing a new US proposal, amid reports that both countries were close to agreeing on a one-page memorandum that could halt hostilities and pave the way for further negotiations.

According to Reuters, sources familiar with the talks said the proposed deal would be followed by discussions to reopen shipping routes through the Strait of Hormuz, lift US sanctions on Iran, and address Tehran’s nuclear programme.

The sharp drop in prices reflects easing concerns over supply disruptions that had driven crude above $100 per barrel in recent weeks due to the conflict, which disrupted energy flows through the strategic waterway.

Brent was at $108 per barrel before it later dropped to $98 amid hopes that both Washington and Tehran would resolve their differences soon.

Reuters reports of progress in negotiations triggered a broad sell-off in oil markets, with investors betting on a potential restoration of supply once the strait is reopened.

US President Donald Trump, in a social media post, suggested that the war could end if Iran “agrees to give what has been agreed to,” adding that failure to do so could lead to intensified military action.

He also announced a pause in a naval mission aimed at reopening the Strait of Hormuz, citing “great progress” in ongoing peace talks.

Meanwhile, a Pakistani source involved in mediation efforts was quoted as saying, “We will close this very soon. We are getting close.”

Despite the optimism, there were indications that significant issues remain unresolved, particularly regarding Iran’s nuclear activities and other longstanding US demands.

An Iranian lawmaker, Ebrahim Rezaei, described the reported proposal as “more of an American wish list than a reality,” signalling potential resistance from Tehran.

Analysts said the oil market remains highly sensitive to geopolitical developments, noting that any breakthrough in negotiations could further ease prices, while a collapse in talks may trigger renewed volatility.

The Strait of Hormuz, a key global oil transit route, has been at the centre of the disruption, with restricted shipping contributing to supply concerns in recent weeks.