Oil prices edged lower as negotiators from the United States and Iran explored a phased agreement to reopen the world's most important energy shipping corridor.

Brent crude futures traded near $105 per barrel, slipping slightly after two consecutive days of gains driven by supply concerns and hawkish rhetoric.

The two sides are reportedly pushing for a breakthrough, with a potential plan that could include Tehran reopening the Strait of Hormuz and Washington lifting its blockade on Iranian ports.

However, the US and Iran have repeatedly appeared close to a deal in the past, only for negotiations to ultimately collapse.

Oil prices are still on track for a weekly gain, with signs of tightening supply in the physical crude market remaining evident.

Many traders remain reluctant to adjust their positions before a significant increase in actual supply materializes.

A White House official said US President Donald Trump remains willing to negotiate with Iran, but stressed that Washington is in no hurry to talk, as sanctions and the blockade have put the US in a position of strength.

Emily Ashford, head of energy research at Standard Chartered, said: "Similar agreements have been floated many times before, but actual progress has been very limited. Even if there is a diplomatic breakthrough, it will not immediately restore disrupted crude flows, bring shipping back to normal, or instantly replenish declining inventories or improve market confidence."