Global oil prices tumbled to three-week lows on Tuesday as traders ramped up bets that the United States and Iran were on the verge of reaching an agreement to ease tensions in the Middle East, despite the absence of a formal deal.

Brent crude fell $4.61, or 5.5 percent, to $79.16 a barrel in afternoon trading, while US benchmark West Texas Intermediate (WTI) dropped $4.70, or 5.85 percent, to $75.64 a barrel, as markets priced in the prospect of the Strait of Hormuz reopening.

The sharp sell-off followed optimistic remarks from senior US officials. Scott BESSENT, Treasury Secretary, said an agreement could be reached as early as Tuesday or Wednesday, while Secretary of State Marco Rubio said negotiations involving Iran and Oman were making progress.

President Donald Trump further fuelled market optimism, describing a deal to reopen the Strait of Hormuz and curb Iran’s nuclear programme as “imminent.”

However, Tehran struck a more cautious tone, denying direct negotiations with Washington and insisting discussions were taking place through Omani mediators.

Iran is also pushing for greater oversight of shipping through the Strait of Hormuz, including authority over inbound and outbound vessel movements.

Despite the optimism, shipping data showed little evidence that conditions had improved. Only six vessels transited the Strait of Hormuz on Monday, compared with seven a day earlier, while traffic through the Bab el-Mandeb Strait remained largely unchanged.

A cargo vessel was also reportedly struck near Oman, highlighting persistent security risks in the region.

Before hostilities erupted in February, nearly one-fifth of global oil and gas supplies passed through the Strait of Hormuz, making it one of the world’s most critical energy chokepoints.

Since then, Persian Gulf producers have cut output significantly, with Saudi Aramco estimating that more than 2.6 billion barrels of oil supply have been lost during the conflict.

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Analysts said Tuesday’s price decline reflected expectations of a diplomatic breakthrough rather than any tangible improvement in physical oil flows.

Goldman Sachs expects Brent crude to trade between $80 and $90 per barrel until either a formal agreement is reached or tensions escalate further. Brent’s fall below that range suggests investors may have moved ahead of developments on the diplomatic front.