CALGARY, May 25 - Oil prices fell nearly seven per cent on Monday as optimism grew that the United States and Iran were moving closer to a peace deal that would reopen the Strait of Hormuz, even though Washington and Tehran played down hopes for an imminent breakthrough.

Brent crude futures were down US$7.24, or almost 7 per cent, at US$96.30 a barrel at 2:29 p.m. ET (1843 GMT) and US West Texas Intermediate futures were down US$6.30, or 6.5 per cent, at US$90.88.