Oil prices declined on Monday after US-Iran talks concluded in Switzerland with Tehran saying it had secured waivers for oil and petrochemical exports, easing worries about a supply shortage in global markets.

Brent crude fell $1.68, or 2.09 per cent, to $78.89 a barrel by 0633 GMT (11:33am PKT). Prices had climbed to $82.30 at the start of trading, fuelled by a bumpy start to the talks with threats from US President Donald Trump to restart the war on Iran and Tehran’s announcement it had again closed the Strait of Hormuz.

US West Texas Intermediate crude futures were at $76 a barrel, down 60 cents, ahead of the contract’s expiry later on Monday. The more active August contract fell 69 cents to $75.16 a barrel. There was no settlement in the US market on Friday due to a holiday.

“The decline has been driven primarily by improving prospects for a diplomatic breakthrough between the United States and Iran … reviving hopes that sanctions on Iran could eventually be eased,” said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.

High-ranking US and Iranian officials wrapped up their first round of talks in Switzerland on Monday, mediators said. The talks began on Sunday under the terms of a memorandum of understanding reached last week to extend a tenuous ceasefire from April for at least another 60 days.

Iranian Foreign Minister Abbas Araghchi said his country had secured waivers for oil and petrochemical exports, the release of some frozen assets and the launch of a reconstruction and development plan for Iran.

“Such a development would allow nearly 1.5 million barrels per day of Iranian crude to return to international markets, significantly improving global supply availability at a time when demand growth remains moderate,” Sachdeva said.

‘Very real risks’

Before the talks, the number of ships that passed the Strait of Hormuz fell sharply on Sunday, shipping data showed, after Iran announced it had again closed the waterway, citing Israeli and US violations of the interim peace deal.

Israeli strikes in Lebanon killed at least 20 people on Saturday, Lebanon’s state news agency NNA said, one day after a ceasefire with Hezbollah took effect, aimed at halting months of escalating violence.

“Recent developments show that moving towards a more permanent deal will be challenging, with very real risks of a flare-up in hostilities during the 60-day ceasefire,” ING analysts said in a note ahead of the announcement of the conclusion of the talks in Switzerland.

Still, oil prices fell more than 8pc last week on hopes of more supply from the release of cargoes stranded in the Gulf and the potential lifting of US sanctions on Iranian oil as part of the US-Iran deal.

Over 25m barrels of Iranian oil have passed through the virtual blockade line since Monday, the head of the National Iranian Oil Company, Hamid Bovard, told state TV on Sunday.

The United Arab Emirates, Kuwait and Iraq have offered more oil to customers in the past week.

Iraq plans to restore crude production gradually to between 4.2m and 4.3m barrels per day, Iraq’s deputy oil minister for upstream affairs said in a statement on Sunday.