Oil prices extended their decline on Wednesday as concerns over a potential military conflict in the Gulf eased, while traders weighed the prospects of an Iran-Oman agreement to secure safe transit through the Strait of Hormuz.

International benchmark Brent crude futures for October delivery fell 2.08 per cent to $86.74 a barrel as of 2:41 a.m. ET. U.S. West Texas Intermediate crude futures for October also declined 2.37 per cent to $80.41 per barrel.

The reduced likelihood of military action has eased perceived risks to Gulf oil supplies, although the United States has not ruled out other forms of intervention, BankPro Chief Executive Officer Paolo Broccardo said, according to CNBC.

Broccardo also noted that Pakistan had reported significant progress in talks focused on de-escalating tensions and restoring navigation through the Strait of Hormuz.

Meanwhile, Iran and Oman were discussing a joint temporary shipping route and mine-clearing mission in the strategic waterway, which could pave the way for a longer-term arrangement to manage navigation through the strait.

“Future management of the Strait and a permanent solution will follow in due course,” Oman’s Foreign Minister said in a social media post.

“Discussions with regional partners will be conducted in support of peace and cooperation, stability and freedom of navigation.”