Oil prices fell to their lowest level since March on Monday after U.S. President Donald Trump and Iran’s deputy foreign minister announced an initial agreement aimed at ending the conflict and restoring shipping through the Strait of Hormuz.

Brent crude futures dropped $4.08, or 4.7 per cent, to $83.25 per barrel by 0415 GMT, while U.S. West Texas Intermediate crude declined $4.35, or 5.1 per cent, to $80.53 per barrel.

Both benchmarks hit their weakest levels since March 10 after also falling more than 3 per cent on Friday.

Pakistan’s prime minister, whose country has acted as a mediator in the negotiations, said the United States and Iran are expected to sign a memorandum of understanding in Switzerland on Friday.

Trump said on Sunday that the Strait of Hormuz would reopen without restrictions and that a U.S. naval blockade of Iranian ports would be lifted.

Iran’s semi-official Mehr News Agency reported that the draft agreement includes plans to reopen the Strait of Hormuz within 30 days under arrangements coordinated by Iran.

The global energy market has lost millions of barrels of oil and gas supplies since the outbreak of the conflict, which led to the closure of the Strait of Hormuz for more than three months.

The strategic waterway, a key transit route for roughly one-fifth of global oil and liquefied natural gas shipments, has remained a major source of disruption to international energy trade.

Iran’s Deputy Foreign Minister, Kazem Gharibabadi, said a broader and more comprehensive agreement would be negotiated during a proposed 60-day ceasefire period.

Meanwhile, the E4 nations — United Kingdom, France, Germany and Italy — said on Sunday they were prepared to lift sanctions on Iran in exchange for further steps by Tehran to address concerns over its nuclear programme.