Oil prices declined on Tuesday as signs of possible negotiations to end the U.S.-Israeli war on Iran eased concerns about supply disruptions linked to the blockade of the Strait of Hormuz, Reuters reported.
Brent crude futures fell by 62 cents, or about 0.6%, to $98.74 at 0828 GMT, while U.S. West Texas Intermediate (WTI) dropped $2.30, or 2.3%, to $96.78. In the previous session, both benchmarks had risen, with Brent gaining more than 4% and WTI nearly 3% after the U.S. military began a blockade of Iran’s ports. Oil prices had also surged 50% last month, marking a record increase.
Although reports of a possible restart of U.S.-Iran talks helped push prices lower, PVM Oil Associates analyst Tamas Varga said the decline overlooks the physical supply impact, noting that oil barrels are still not moving.
According to the International Energy Agency, attacks on energy infrastructure in the Middle East and Iran’s effective closure of the Strait of Hormuz have created the largest oil supply disruption in history, with 10.1 million barrels per day lost in March.
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On Monday, the U.S. military said its blockade of the Strait of Hormuz would expand eastward into the Gulf of Oman and the Arabian Sea. Ship-tracking data also showed that two vessels turned back in the strait as the blockade began.
NATO allies, including Britain and France, did not join the operation and instead called for the waterway to be reopened. Iran responded by threatening to target ports in countries bordering the Gulf after weekend negotiations in Islamabad collapsed.
Those talks had aimed to resolve the crisis over the strait, a critical route that normally carries about one-fifth of global oil and gas supplies.
Despite the tensions, shipping data showed that three Iran-linked tankers were able to enter the Gulf and continue their journeys because their destinations were not Iranian ports.
Five sources told Reuters that negotiating teams from the U.S. and Iran could return to Islamabad later this week. A U.S. official also said engagement was continuing to reach an agreement, while Pakistan’s Prime Minister Shehbaz Sharif said efforts were still ongoing.
Tamas Varga added, “In case talks between the adversaries fail to bear fruit, even revisiting the March highs cannot be ruled out as the decline in global oil inventories might spill into the third quarter and beyond.”
The International Energy Agency also sharply revised its outlook for global oil supply and demand growth, forecasting that demand will fall by 80,000 barrels per day in 2026, while supply is expected to decline by 1.5 million barrels per day in the same year.
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