Oil extended its losses on Tuesday, falling by about 5% as markets continued to price in the possibility of peace between the U.S. and Iran while a suspension of military strikes between the two countries remained in place. The move also reflected how quickly crude can react to shifts in perceived supply risk around the Strait of Hormuz, a chokepoint for a large share of global seaborne oil flows and a key route for exports from Gulf producers.

As of 1601 GMT, Brent crude had fallen $4.61, or 5.2%, to $83.75 per barrel, while West Texas Intermediate dropped $4.06, or 4.9%, to $78.55. Both benchmarks were down about 17% over three days.

Sentiment improved for oil bulls on Tuesday after Israel Katz, Israel’s defense minister, told media that U.S. President Donald Trump was preventing Israel from striking Iran’s energy assets.

“We're prepared to set [Iran] back 40 years,” Katz said. “The United States is not approving it at the moment because of the concern that Iran would attack neighbouring countries, causing a global oil crisis…..as far as we’re concerned, we’re prepared to set [Iran] back 40 years.”

Additional optimism came from a Gulf source and a Western diplomat, who told media that Oman had presented Iran with a Gulf-backed plan to manage the Strait of Hormuz, including the collection of voluntary fees for its use. Any arrangement involving transit through the waterway is closely watched by oil traders because disruptions there can affect tanker traffic and the flow of crude and refined products.

Trump also added to the more positive tone after saying that “good talks” were underway with Iran, although the Islamic republic denied that it was seeking to resume talks with the U.S.

In a Tuesday note, Goldman Sachs said that if the Strait of Hormuz fully reopens by the final three months of this year, Brent should hover around $80 per barrel by year-end. “But Red Sea disruptions and attacks on Saudi oil infrastructure may pose a new source of upside risk for crude and refined products prices,” the bank said.

In other oil-related developments, a weekend attack by the Iran-backed Houthis damaged Saudi Aramco’s Jazan refinery, which has a capacity of 400,000 barrels per day, forcing it to close. Repairs are tentatively expected to be completed by mid-August.

The Houthis also struck Aramco facilities in Yanbu. Oilprice.co market analyst Juianne Geiger said, “A Houthi strike on Yanbu suggests the war may now be following the workaround west,” a reference to Saudi Arabia’s use of the Red Sea port to move crude around the Strait of Hormuz.