Oil prices fell on Monday amid a pause in strikes between the US and Iran, boosting hopes for a return to a ceasefire and new talks on reopening the Strait of Hormuz.

Oil prices dropped sharply at Monday’s opening of Asian markets as investors breathed cautious sighs of relief following two consecutive nights without US strikes on Iran, leaving the door open for new talks.

The price of a barrel of international benchmark North Sea Brent crude fell 5.58 percent to $91.38, while its US counterpart West Texas Intermediate slid $5.46 percent to $84.43.

The US ambassador to the United Nations told US media that Trump is giving Iran talks “some space.”

“He’s giving talks some space, he’s giving it a little bit of room,” Mike Waltz told the broadcaster on Sunday, while dismissing reports that the United States was rationing munitions over supply concerns.

He added that the United States remained “locked and loaded” for more attacks, with additional assets moved into the region.

Prior to Friday, the US military had announced strikes on Iran for 13 consecutive nights, in the largest rekindling of the war since an April ceasefire. No new strikes were announced over the last two days.

Tehran in turn said it would stop its retaliatory attacks on regional neighbors, handing Gulf shipping and the oil industry a respite.

“These attacks continued until two nights ago, but over the past two nights the Americans have stopped their attacks,” said army spokesman Mohammad Akraminia. “Since… our strategy has essentially been retaliatory, we have also halted our retaliatory operations.”

The market is showing optimism about a truce that would allow the resumption of navigation through the Strait of Hormuz.

This strategic waterway typically carries a fifth of the world’s daily oil and liquefied natural gas production.

A second source of concern for the market emerged with the announcement by Yemen’s Houthi rebels on Monday of a blockade in the Red Sea and the Gulf of Aden targeting Saudi ships, the world’s largest crude oil exporter. The Red Sea route has become vital for Saudi Arabia to circumvent Tehran’s disruption of shipping through the Strait of Hormuz. (AFP)