Oil prices dropped Monday after President Trump said negotiations with Iran to reopen the Strait of Hormuz were moving ahead — though traders remained braced for more potential chaos as the blockade that has choked global energy supplies drags on.

Both international benchmark Brent crude and US benchmark West Texas Intermediate crude had fallen about 5% as of 9:45 a.m. ET — to $98 a barrel and $92 per barrel, respectively — after Trump voiced progress on talks with Iran.

“The negotiations are proceeding in an orderly and constructive manner,” he wrote Sunday on social media, while cautioning that the US would “not rush into a deal.”

Monday’s selloff extended losses from last week, when WTI dropped more than 8% and Brent fell more than 5% after Trump said he halted imminent airstrikes on Iran to give diplomacy more time.

Still, despite Monday’s decline, crude remains dramatically elevated from prewar levels after surging more than 30% since the US and Israel launched strikes against Iran in late February.

Scott Martin, a partner at Kingsview Wealth Management, told The Post that investors may be prematurely pricing in a resolution to the Iran crisis even as major risks remain unresolved.

“I think the market may be getting a little ahead of itself here,” he said. “Every positive headline around Iran talks seems to knock oil lower, but the actual supply situation still looks pretty tight.

“A lot of traders are acting like this thing is almost resolved already, and I don’t think we’re there yet,” he added. “You still have production offline and the Strait of Hormuz is still a real wildcard.”

The latest rout was driven by mounting hopes that Washington and Tehran could eventually hammer out a framework to reopen Hormuz — the narrow waterway that handles roughly 20% of the world’s oil supply, which has become the epicenter of the largest energy shock in modern history.

Iran has maintained a de-facto blockade of the strait since early March, forcing vessels to seek permission before passage or risk attack.

The move followed the killing of Iran’s supreme leader Ayatollah Ali Khamenei and a number of top regime figures in US and Israeli strikes.

The US retaliated with its own blockade targeting Iranian ports and shipping.

Trump said Sunday that the American crackdown would remain in “full force and effect until an agreement is reached, certified, and signed.”

But even as Wall Street cheered signs of diplomacy, analysts warned the market may be getting ahead of itself.

Secretary of State Marco Rubio said there was a “pretty solid thing on the table” involving reopening the strait and beginning temporary nuclear negotiations with Tehran, though Iranian officials quickly poured cold water on expectations of an imminent breakthrough.

Iranian foreign ministry spokesman Esmaeil Baghaei said talks had advanced on several issues but stressed that did not mean Tehran was close to signing an agreement.

The mixed messaging underscored the fragile state of negotiations — and the enormous risk still hanging over global oil markets.

The International Energy Agency estimates that more than 14 million barrels per day of oil production remains shut in across the Gulf region, while cumulative supply disruptions have already topped 1 billion barrels.

Global inventories plunged by roughly 250 million barrels during March and April as refiners scrambled to replace missing Middle Eastern crude, the IEA oil market report from last week said.

Even if a deal is eventually reached, analysts expect it could take months — not days — for tanker traffic, insurance markets and damaged production facilities to normalize.

That reality has left traders caught between collapsing geopolitical optimism and an energy market still suffering from severe physical shortages.

“Physical oil flows” remain the key issue, UBS analyst Giovanni Staunovo told Reuters, warning investors not to overreact to headlines about diplomacy while shipping through Hormuz remains heavily restricted.

The Energy Information Administration still expects Brent crude to average above $100 a barrel in the near term before potentially easing later this year if Gulf traffic gradually resumes.

Martin warned that crude could quickly rebound if negotiations stall after markets already stripped out much of the geopolitical risk premium.

“If these talks drag out or fall apart, oil could move right back up fast because the market already pulled some of that fear premium out,” he told The Post.

“The bigger issue right now is mixed messaging,” Martin added. “One day it sounds like progress, the next day it sounds tense again. That makes it really hard for traders to know what’s real and what’s just short-term headline movement.”

Meanwhile, the shipping crisis remains acute.

War-risk insurance premiums for tankers have soared more than 1,000% since the conflict erupted, with some vessels facing insurance charges approaching $7 million per voyage.