Meanwhile, the U.S. late Monday conducted "self-defence" strikes in the southern part of the republic: File Image/Pixabay.

The resurrected perception that the U.S. and Iran are close to a deal that would end the war between the countries caused oil on Monday to plummet nearly 7 percent – but if statements from the Islamic republic carry any weight, the ceasefire may soon crumble and the hostilities will resume.

While investors seemed swayed, analysts were less convinced of a peace deal taking place. "We've routinely gotten close and then collapsed on the details multiple times over the past couple of months, and the [Strait of] Hormuz remains closed," said Rory Johnston, founder of the Commodity Context newsletter.

Brent on Monday dropped $7.24, or almost 7 percent, at $96.30 per barrel by1843 GMT, and West Texas Intermediate fell $6.30, or 6.5 percent, at $90.88.

Negotiators for the U.S. and Iran said they made progress on a memorandum of understanding that would halt the war and give negotiators 60 days to reach a final deal; U.S. president Donald Trump on Sunday stated that talks with Iran were going “nicely,” but warned that bombing would resume if Iran didn’t give up its nuclear ambitions.

Yet, on Monday Iran’s foreign ministry said nuclear issues were not being discussed.

Post-trading, news broke that the U.S. military carried out “self-defense strikes” in southern Iran “to protect our troops from threats posed by Iranian forces,” according to Captain Tim Hawkins, a spokesperson for CENTCOM.

Even if a deal was reached, it wouldn’t affect fundamentals resulting from the prolonged blockage of the Hormuz: “The underlying supply shortfall of 10-11 [million barrels per day] of crude oil does not go away immediately and will see markets still drawing inventories until Middle Eastern crude production is back online, which is months away,” said June Goh, analyst as Sparta Commodities.

For the record and according to U.S. officials, an interim draft being studied by the two warring countries outlines a process to fully reopen the Hormuz without tolls; in exchange, Iran would receive sanctions relief and the gradual unfreezing of up to $25 billion in assets currently held in foreign banks.

Before Monday's statement from the foreign ministry, Iran reportedly agreed in principle to hand over or dispose of its highly enriched uranium stockpile, which is key for the deal to move forward.