Global oil prices fell sharply on Tuesday after reports said the United States and Iran are close to a peace agreement. Oil prices dropped by more than four percent when President Trump said there was progress in diplomatic talks. This comes after weeks of high tension between the two countries that affected energy markets.

The agreement is expected to end a two-month conflict, which included military actions and strong economic sanctions. As part of the planned deal, Iran would stop certain activities and come back to formal negotiations, while some sanctions against Iran could be removed.

A key part of the agreement is the reopening of the Strait of Hormuz, which is important for the world’s oil supply. The news that ships can move safely through the waterway has helped reduce concerns about a possible global energy shortage. Countries now wait to see if the final deal will be agreed next week.