Oil prices fell 4% on Monday after U.S. Vice President JD Vance said progress has been made in talks with Iran and that the Strait of Hormuz was open, easing supply concerns.

Brent crude was down $3.18 or 3.95%, at $77.39 a barrel by 11:44 a.m. ET (1544 GMT) Prices had climbed to $82.30 at the start of trading because of threats from U.S. President Donald Trump to restart the war on Iran, as well as an announcement from Tehran that it had again closed the Strait of Hormuz.

U.S. West Texas Intermediate crude futures were at $74.45 a barrel, down $2.15, ahead of the contract’s expiry later on Monday. The more-active August contract lost $2.49, or 3.28%, to $73.36 a barrel.

High-ranking U.S. and Iranian officials wrapped up their first round of talks in Switzerland on Monday, mediators said. The discussions began on Sunday under the terms of a memorandum of understanding reached last week to extend a tenuous ceasefire from April for at least another 60 days.

The U.S. authorized Iranian oil sales on Monday. The general license, announced by the Treasury Department, allows the sale of crude oil and petrochemical and petroleum products of Iranian origin through August 21.

Meanwhile, Tehran did not negotiate on its nuclear programme and did not accept any new commitments in Sunday’s talks with the U.S. in Switzerland, Foreign Ministry spokesperson Esmaeil Baghaei told the official IRNA news agency.

Supply Recovery Remains Challenging

Iran has resumed exports of its oil, which were blocked earlier this month due to the U.S. naval blockade, UBS analyst Giovanni Staunovo said. “The ‘release’ of those barrels is additional supply for the market,” he added.

Two crude tankers with just under 2 million barrels of oil sailed through the Strait of Hormuz on Monday, ship tracking data showed, in a sign that traffic was picking up following weaker flows on Sunday due to concerns over passage through the waterway.

The United Arab Emirates, Kuwait and Iraq have offered more oil to customers in the past week.

Iraq plans to restore crude production gradually to between 4.2 million and 4.3 million barrels per day, its deputy oil minister for upstream affairs said in a statement on Sunday.

ANZ expects around 2 million to 3 million barrels per day to be restored in the first four weeks.

Recovery will remain challenging, it said, with a further 2 million to 3.5 million bpd potentially recoverable in the third quarter of 2026 subject to stability, while 1 million to 2 million bpd of supply could be permanently or semi-permanently lost.

“Early gains will be driven by logistics (shipping) rather than production,” ANZ added. “Later gains will depend on upstream and refinery recovery. Full restoration is unlikely this year.”

Meanwhile, Israeli strikes in Lebanon killed at least 20 people on Saturday, Lebanon’s state news agency NNA said, one day after a ceasefire with Hezbollah took effect.

(Reporting by Georgina McCartney in Houston, Anushree Mukherjee in Bengaluru, Stephanie Kelly in London, Mohi Narayan in New Delhi and Florence Tan in Singapore; Editing by Muralikumar Anantharaman, Jan Harvey and Sanjeev Miglani)