Oil prices fell on Thursday as fresh talks between the United States and Iran raised expectations that tensions between both countries could ease, improving global supply conditions.

Brent crude slipped from about $106 per barrel to $102, while West Texas Intermediate (WTI) dropped from around $98 to $96. The decline came as markets reacted to renewed diplomatic efforts aimed at reaching a possible agreement.

Officials in United States are currently awaiting a response from Iran on a proposed framework designed to reduce hostilities and prevent further escalation of the long-running conflict.

Iranian authorities confirmed they have received the proposal and are reviewing it. The country’s foreign ministry said it remains open to discussions but also signaled it could respond with resistance if negotiations fail.

The latest diplomatic movement has drawn wider regional attention, with several stakeholders reportedly involved in efforts to encourage a peaceful resolution. The discussions come after weeks of volatility in oil markets driven by fears of supply disruption.

Market analysts say the biggest focus remains the Strait of Hormuz, a key route for global oil shipments. Any agreement that reduces tensions in the area could ease shipping risks and bring prices down further.

Attention is also on OPEC+ producers, who may consider a modest output increase at their next meeting in early June. The move is expected to influence global supply levels depending on how geopolitical developments unfold.

Despite the recent decline, crude prices are still higher than earlier in the year, showing that the market remains sensitive to developments in the Middle East.