Early Monday trading saw international oil prices drop sharply following reports that the U.S. government and Iran have entered negotiations to reopen the Strait of Hormuz to shipping and de-escalate conflict in the Middle East.

During Monday's morning session, the North American benchmark West Texas Intermediate crude futures fell as much as 6.1%, trading at $90.68 per barrel. The global benchmark Brent crude futures also declined by 6.1%, quoted at $97.22 per barrel.

The decline in oil prices led to a slight decrease in U.S. retail fuel prices. Data from the American Automobile Association showed the national average price for regular gasoline on Monday was over $4.50 per gallon, down less than one cent compared to both Sunday and the previous week.

The average price for diesel fell by more than three cents from a week ago, dropping below $5.60 per gallon.

Despite elevated fuel costs, the association projected last week that over 39 million people would travel by car during the Memorial Day weekend, setting a new record.

AAA spokesperson Tiffany Wright noted, "While we are seeing another record travel volume, the year-over-year growth rate is the lowest in over a decade. Demand remains strong, but high gas prices and persistent inflation may lead people to shorten trips, postpone plans, or opt for shorter journeys."

Multiple media outlets reported on Sunday that officials from the U.S. and Iran are discussing terms for a ceasefire agreement.

Last month, the Iranian military restricted traffic through the Strait of Hormuz, a critical waterway that handles nearly one-fifth of global oil shipments. The U.S. responded by deploying naval forces to block Iranian ports. This action roiled global energy markets. Before U.S.-led strikes on Iran, the U.S. average gasoline price was below $3 per gallon; prices have surged significantly since then.

The U.S. Central Command stated on Saturday that during the blockade operation, it had rerouted approximately 100 vessels within the strait.

On Monday, the U.S. President indicated that the negotiations would ultimately result in either a substantive agreement or no deal at all.

Patrick De Haan, head of petroleum analysis at Gas Buddy, posted on social media Sunday, stating that until a formal agreement is signed and significant vessel traffic resumes, the U.S. national average gasoline price is likely to remain above $4 per gallon.

Data from a Strait of Hormuz monitoring website showed only two vessels transited the strait in the past 24 hours, far below the pre-conflict daily average of around 60 ships.

De Haan added that a significant drop in oil prices would only occur once market confidence is restored and shipping traffic returns to normal levels.