Oil slides after Pakistani source says US and Iran are close to framework peace deal

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

Brent crude futures fell by $9.08, or 8.3%, to $100.79 a barrel by 1205 GMT, having earlier dropped below $100 for the first time since April 22. U.S. West Texas ​Intermediate lost $9.12, or 8.9%, to $93.15.

Both benchmarks were on track for their biggest daily ​declines in absolute and percentage terms since mid-April 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.

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.

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.

Official ​numbers from the EIA, the statistical arm of the ​U.S. Department of Energy, are due at 1430 GMT .