U.S. oil falls below $90 on report Iran agreement would restore Hormuz traffic in one month

West Texas Intermediate futures tumbled 4.6% to $89.55 per barrel by 9:11 a.m. ET. International benchmark Brent oil slid 3.75% to $95.85.

Iranian state television claimed to have a copy of a draft framework for a memorandum of understanding with the U.S., according to Reuters.

Tehran has committed to restore commercial traffic through Hormuz to pre-war levels within one month of an agreement with the U.S., according to Reuters citing Iranian state television.

However, Iran will manage ship traffic through Hormuz in cooperation with Oman, state television said. U.S. military forces would withdraw from the vicinity of Iran and lift the naval blocakde, the reports said.

Iran and the U.S. teetered this week between a deal and a renewed round of military escalation. U.S. forces launched strikes in southern Iran in a move the Pentagon described as defensive. Tehran vowed to retaliate for the attacks.

Industry veterans are skeptical oil flows will quickly return to pre-war levels.

It will take at least four months to ramp oil flows to 80% of normal levels even if the U.S.-Iran conflict ends immediately, said Sultan Ahmed Al Jaber, the head of Abu Dhabi National Oil Co., last week. It will take until the first or second quarter of 2027 for flows to fully normalize, he said.