June WTI fell 4.7% to $99.90 a barrel, while July Brent dropped 2.6% to $107.36 as Pakistan-mediated negotiations continued.
The move extended earlier losses after reports Iran had responded to US amendments on a possible peace agreement, deepening expectations of easing geopolitical risk.
WTI had traded around $103 and Brent near $110 earlier on Thursday, but both benchmarks retreated from session highs as traders tracked diplomatic developments.
As war rages and a key strait is closed, what is truly driving oil prices down?
What secret offer from Iran could end the costly blockade of the world's most vital oil chokepoint?
Can a new deal truly resolve the nuclear standoff, or is this just another temporary truce?