Istanbul: Oil prices extended their losses Thursday as hopes for a Middle East peace deal eased concerns about supply disruptions and raised expectations for the gradual reopening of the Strait of Hormuz: International benchmark Brent crude futures fell nearly 5% to $96.5 per barrel as of 1255GMT. US benchmark West Texas Intermediate (WTI) declined 4.8% to $90.5.

According to Anadolu Agency, the selloff came after reports suggested the US sent a one-page memorandum of understanding to Iran through Pakistani intermediaries, aimed at formally ending the war and setting out a framework to gradually restore passage through the shipping channel. Tehran is expected to respond within days after confirming that it is reviewing the proposal, though wider negotiations about Iran's nuclear program are expected to be held separately at a later stage.

US President Donald Trump stated that no agreement had been finalized, warning that it would be a 'big assumption' to expect Iran to accept the proposal. He also mentioned that the US could resume military strikes if Tehran fails to comply.

Oil prices faced additional downward pressure after Trump temporarily reversed his plan to support commercial vessels transiting the Strait of Hormuz. Trump's sudden shift followed a decision by a key Gulf ally to suspend the US military's use of its bases and airspace for the operation, NBC News reported Wednesday, citing sources.

The development strengthened expectations that Washington could be moving from military measures and toward a diplomatic track, reducing fears of a wider disruption in one of the world's most important energy corridors. The Strait of Hormuz is a critical chokepoint for global oil and liquefied natural gas shipments, and weeks of conflict in the region had pushed crude prices sharply higher amid concerns about supply shortages.