Oil prices dropped sharply on Monday, with Brent breaking below $100 a barrel, but remain well above pre-war levels of nearly $70 a barrel

World stocks jumped on Monday, while oil prices sank, as investors parsed through signs that Iran and the U.S. may be approaching a permanent peace deal, although both sides have tempered expectations for an immediate agreement.

In Europe, the pan-regional Stoxx 600 ended the day more than 1% higher, approaching levels not seen since early March, while stocks in Germany and France advanced in likely thin trading due to a holiday in a number of places.

U.S. stock futures also jumped. The Dow futures contract had added 426 points, or 0.8%, S&P 500 futures had advanced 67 points, or 0.9%, and Nasdaq 100 futures were higher by 366 points, or 1.2% by 16:44 GMT. Markets on U.S. stock market will be closed today in observance of Memorial Day.

Iran and the U.S. have reached a framework of a deal to end their more than two-month old war, but a potential memorandum of understanding does not include specifics about the management of the Strait of Hormuz, according to a news report citing an Iranian foreign ministry spokesperson.

An agreement between Tehran and Washington cannot be said to be imminent, although both sides have reached conclusions on a range of topics, the spokesperson said, according to Reuters.

The strait has been all but shuttered to tanker traffic for weeks, driving up oil prices and fuelling worries over a burst of inflation in countries around the world. Bets have grown that many central banks will react by lifting interest rates.

Oil prices dropped sharply on Monday, with Brent breaking below $100 a barrel, but remain well above pre-war levels of nearly $70 a barrel.

Notably, the Iranian foreign ministry spokesperson said that Tehran will not be taking tolls from vessels traversing the strait, potentially reversing a major threat that Tehran would move to solidify a financial stranglehold over the conduit. However, the spokesperson noted that any services which will be provided will require a price but should not be presented as tolls.