Oil prices fell for a third straight day after Iran and Oman discussed measures to temporarily reopen the Strait of Hormuz. Brent crude oil for October delivery fell 2.6% to $86.62 a barrel, while West Texas Intermediate dropped 2.7% to $80.12 a barrel. The contracts are on track to settle at their lowest levels in close to two weeks.

The drops come after Oman and Iran said the countries' foreign ministers discussed an agreement to reopen the Strait of Hormuz under a temporary framework. In a joint statement following talks in Tehran, the pair said a proposed framework would establish a temporary shipping route through the crucial waterway. The countries would also work together to clear the strait of mines, they said.

Meanwhile, a flurry of positive headlines raised hopes for diplomatic progress in the region. Axios reported that around 40 ships transited the strait over the weekend, while The New York Times reported U.S. diplomats would return to the Middle East. An agreement between Oman and Iran wouldn't result in oil flows returning to prewar levels, ING analysts Warren Patterson and Ewa Manthey said, noting the U.S. would likely need to lift its blockade on Iranian ports and ease sanctions before normalization.