Oil prices have fallen sharply after US President Donald Trump said he had cancelled plans to strike Iran, Reuters reports.

Brent futures have dropped by $3.37, or 3.6 per cent, to $89.73 a barrel by 1738 GMT, while US West Texas Intermediate (WTI) crude futures have fallen by $3.20, or 3.6pc, to $86.83 a barrel.

Trump had earlier threatened to hit Iran “very hard” as tensions in the Middle East escalated sharply over recent days. Still, Iranian sources and Western officials say indirect talks for a preliminary peace deal between the two sides have intensified.