Donald Trump said the Strait of Hormuz would open "very soon" or Iran would be "hit very hard" as oil prices fell to a three-week low amid hopes of a deal.
The US president was speaking to Fox News after Secretary of State Marco Rubio and Treasury Secretary Scott Bessent both said talks had progressed to allow shipments potentially to resume later this week. BBC reported.
On Tuesday, the cost of a barrel of Brent crude, the global benchmark for oil prices, fell by almost 5% to under $80 (£60) on the news of supply disruptions potentially being eased. It continued to move lower on Wednesday - down about 0.7% in Asian trading.
But the failure of previous talks in recent months to de-escalate the conflict has led to a volatile oil market, with motorists ultimately being hit by higher fuel prices.
"We're having very good discussions," Trump said during a visit to California, insisting Iran was keen to seal a deal to bring an end to months of conflict.
US Central Command (CentCom) said the "southern route through the Strait of Hormuz remains free and open for all commercial vessels seeking to transit the international waterway".
On Tuesday, along with the drop in Brent crude, US West Texas Intermediate prices were down more than 5%, to $76 a barrel. Both contracts dropped to their lowest levels since 13 July.
Rubio said there had been progress made in discussions on getting more ships through the strait with Iran and Oman.
"There's been progress made in those talks, but not finality yet. We're hoping that will happen very shortly," he told reporters at the State Department.
Bessent said a deal to reopen the Strait of Hormuz could be agreed as soon as Tuesday or Wednesday.
