Oil prices moved lower after reports emerged that US and Iranian negotiators are working on a phased agreement that would include Iran reopening the Strait of Hormuz.

The international benchmark Brent crude retreated to around $106 a barrel, after gaining more than 7% over the previous two sessions, while US West Texas Intermediate (WTI) slipped below $94.

According to people familiar with the matter, the two countries, which have failed to reach a similar deal over recent months, are seeking a breakthrough in negotiations during the United Nations General Assembly.

As the US-Iran conflict approaches the end of its seventh month, crude oil has once again seen sharp swings this week.

Oil prices were buffeted by a mix of factors, including conflicting signals on the war's outlook, the prospect of restored crude flows from the Middle East, and market speculation that the United States may ban diesel exports.

Brent crude is still up more than 70% year to date, adding to inflationary pressure.

Harris Kulsheed, chief investment officer at Karobaar Capital LP, said: "Absent any major developments, Brent is likely to stay in the $100 to $110 range. A credible phased agreement could quickly push prices back below $100; while another disruption to exports or the logistics chain could send prices back to $120."

Brent crude for November delivery fell 0.5% to $106.10 a barrel.

WTI crude for November delivery dropped 0.7% to $93.91 a barrel.