The U.S. has offered an interim waiver on oil sanctions against Iran, semi-official outlet Tasnim reported on Monday.
The outlet noted that the measure, a key demand from Tehran to end the war, would be in place until hostilities end and the countries reach a definitive agreement.
Oil prices reversed earlier gains after the report. Brent crude, the international benchmark, was barely changed at 10:13 a.m ET. The West Texas Intermediate, the U.S. benchmark, showed a similar behavior at the same time.
The development comes a few hours after President Donald Trump threatened Tehran if negotiations don't move forward, saying the country will be hit "much harder" in such a scenario.
Trump said "the clock is ticking" for the country. "We want to make a deal. They are not where we want them to be. They will have to get there, or they will be hit badly, and they don't want that," he added.
Iranian Foreign Ministry spokesperson Esmaeil Baghaei, in turn, said the country has given its response to the latest U.S. proposal.
Baghaei said in a press briefing on Monday that the process will continue through the mediation of Pakistan, but clarified the country will not cede on uranium enrichment rights.
"What can be said with certainty is, first of all, that rights are not something we are to negotiate or compromise over," the official said. "There is no need for another party to recognize this right for Iran. This right already exists," he added.
Global oil markets remain under strain as the Strait of Hormuz remains closed. International Energy Agency Fatih Birol warned on Monday that commercial oil inventories are being quickly depleted and there are only a few weeks worth left of them.
Speaking to reporters in the sidelines of the G7 finance leaders meeting in Paris, Birol said the release of reserves has been adding 2.5 million barrels of oil per day to the market, but they "are not endless."
Birol went on to say that there was a large surplus of reserves before the war began, but the situation has now shifted drastically. "We should be aware of the fact that it is declining rapidly," Birol added.
Overall, more than a billion barrels of oil have not been produced since the conflict began in late February, according to the International Energy Agency's latest update. The figure amounts to about 14 million barrels per day.
