Oil prices fall below $100 as U.S. waits for Iran response to framework deal

Oil prices fell Thursday, as the U.S. waits for Iran’s response to a proposal to end the war and reopen the Strait of Hormuz.

International benchmark Brent crude futures for July fell nearly 4% to $97.47 a barrel. U.S. West Texas Intermediate futures for June were down 3.88% to $91.39 per barrel.

Iran’s Foreign Ministry spokesperson Esmaeil Baqaei told news outlets Wednesday that Tehran is still reviewing the U.S. proposal and would present its response to mediators in Pakistan.

Baqaei said in a social media post that negotiations require “a genuine attempt to engage in discussions with a view to resolving the dispute.” Negotiations are not dictation, deception, extortion or coercian, the Foreign Ministry spokesperson said.

President Donald Trump said Wednesday that the U.S. military offensive, known as Operation Epic Fury, “will be at an end” if Iran “agrees to give what has been agreed to, which is, perhaps, a big assumption.”

If that happened, the U.S. naval blockade of Iranian ports in the Gulf of Oman would “allow the Hormuz Strait to be OPEN TO ALL, including Iran,” Trump wrote in a social media post.

However, the president said Iran will be bombed “at a much higher level” if it doesn’t agree to a peace deal, underscoring that Iran-U.S. negotiations to end the war remain fragile.

U.S. officials told Axios on Wednesday that the U.S. and Iran were close to a one-page, 14-point memorandum of understanding that would end the war and establish a framework for further negotiations.

The deal would lift restrictions in the Strait of Hormuz, according to the Axios report. Iran would commit to a moratorium on nuclear enrichment and the U.S. would lift sanctions and release frozen funds.

Scott Chronert, Citi U.S. equity strategist, said that the duration of the conflict will affect the wider economy.

“The duration of the conflict and the implication that has for higher oil prices for longer is a big deal as it pertains to future growth expectations for many parts of the market, as well as how it influences the Fed thinking in terms of the interest rate dynamic,” Chronert said on CNBC’s Squawk Box.

— CNBC’s Chloe Taylor and Kevin Breuninger contributed to the report