Oil prices fell further after Iran's supreme leader approved the government to begin negotiations, raising hopes of resolving a conflict that has disrupted Middle East energy supplies for months.
Following the announcement by Iranian state media, London Brent crude futures dropped 6%, trading near $106 per barrel.
Earlier reports that Trump told Israeli Prime Minister Netanyahu he wanted to leave room for U.S.-Iran talks had already weighed on oil prices.
So far, the two sides have not reached an agreement on fully reopening the world's most important energy chokepoint, and the conflict has temporarily fallen into a stalemate.
Gulf states worry that if the U.S. and Israel strike Iran again, it could trigger a more destructive regional war, ultimately requiring Gulf states to clean up the aftermath.
Although crude shipments through the Strait of Hormuz have resumed, oil prices still rebounded in October, touching a six-month high.
Trump has repeatedly said he may restart strikes on Iran after the midterm elections, but his administration has also signaled that diplomacy remains the priority.
Even though Persian Gulf oil-producing countries have managed to increase shipping volumes through the strait, with volumes at times approaching pre-war levels, the shipping industry remains shrouded in the risk of being attacked within the waterway.
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