NEW YORK CITY, New York: Oil prices dropped sharply below US$100 a barrel on April 8 as signs of a temporary de-escalation in the Iran conflict prompted investors to unwind positions built on supply fears.

Markets reacted after U.S. President Donald Trump said he had agreed to a two-week ceasefire with Iran, contingent on the immediate and safe reopening of the Strait of Hormuz.

Brent crude futures fell $14.83, or 13.57 percent, to $94.44 a barrel by 11:02 a.m. ET (1502 GMT), while U.S. West Texas Intermediate (WTI) dropped $17.92, or 15.87 percent, to $95.03.

Investors are likely focusing on de-escalation and are selling oil as a result, UBS analyst Giovanni Staunovo said.

The ceasefire announcement marked a sharp shift in tone after Trump had earlier warned of widespread attacks on Iranian civilian infrastructure if Tehran did not reopen the Strait of Hormuz, a vital route through which about 20 percent of global oil supply flows.

"This will be a double-sided CEASEFIRE!" Trump wrote on social media after posting earlier on April 7 that "a whole civilization will die tonight" if his demands were not met.

Despite the market reaction, conditions on the ground remained uncertain.

Shipping sources said the Iranian navy threatened ships attempting to pass through the Strait of Hormuz without Tehran's permission with destruction on Wednesday and that transit through the waterway remained shut.

Iran said it would halt its attacks if strikes against it stopped and indicated that safe transit through the Strait could be possible for two weeks in coordination with its armed forces, according to a statement by Foreign Minister Abbas Araqchi.

A senior Iranian official said the Strait could reopen in a limited, controlled manner as early as April 9 or April 10, ahead of planned talks between U.S. and Iranian officials in Pakistan.

"Safe passage for ships in the Strait of Hormuz will be a key point in the talks... oil is set to remain meaningfully above pre-war levels until there is clear evidence of shipping normalization," said Raymond James analyst Pavel Molchanov.

Industry participants were still assessing the situation. Shippers were seeking clarity on transit logistics, while refiners were making inquiries about fresh crude loadings following news of the ceasefire.

Tensions also persisted in the region. Iran attacked Saudi Arabia's East-West Pipeline hours after the ceasefire agreement, according to an industry source, targeting the kingdom's primary crude export route since hostilities began.

Several Arab states reported missile launches and drone activity or issued warnings urging civilians to take shelter.

Trump said the United States had received a 10-point proposal from Iran, which he described as a workable basis for negotiations, adding that the sides were moving closer to a broader agreement for long-term peace.

He also said Washington would engage Tehran on tariff and sanctions relief.

Oil prices later trimmed some losses after U.S. government data showed a larger-than-expected increase in crude inventories.

U.S. crude stocks rose by 3.1 million barrels to 464.7 million barrels in the week ended April 3, the Energy Information Administration said, exceeding expectations for a 701,000-barrel increase in a Reuters poll.