Oil Falls on Hopes for More US-Iran Talks

WTI crude oil futures dropped below $97 per barrel on Tuesday, amid signs the US and Iran may resume talks, following Washington’s move to impose a blockade on the Strait of Hormuz. Discussions are underway to hold another round of negotiations before a two-week ceasefire expires, with reports suggesting talks could take place in Pakistan. The sides failed to reach an agreement after extended weekend negotiations, prompting Trump to announce a blockade on Iranian oil shipments. Saudi Arabia has urged the US to lift the blockade and return to diplomacy. Meanwhile, the IEA warned the conflict could erase global oil demand growth this year, marking the first annual decline since the pandemic, while noting prices may not yet reflect the scale of the disruption. The war has damaged energy infrastructure and severely restricted traffic through the Strait of Hormuz, with an OPEC+ report showing output fell by 7.9 million barrels per day in March.

WTI crude futures dropped below $96 per barrel on Tuesday, reversing gains from the previous session as reports indicated that the US and Iran are considering further negotiations aimed at securing a longer-term ceasefire before the current two-week truce expires. President Donald Trump stated that Tehran had initiated contact with Washington, while Iranian President Masoud Pezeshkian signaled readiness to pursue continued dialogue, provided it remains within the bounds of international law and regulations. Both sides failed to reach a deal after 21 hours of negotiations over the weekend, prompting President Trump to announce a blockade on Iranian oil shipments. Meanwhile, an OPEC+ report revealed that the group’s output fell by 7.9 million barrels per day in March, largely due to the shutdown of the Strait of Hormuz. Investors are now turning their attention to the IEA’s upcoming monthly market report for clearer signals on global supply-demand conditions.

WTI crude oil futures were up less than 2% at nearly $98 per barrel on Monday afternoon, cutting gains of up to 9% from the morning as investors hoped that a deal would eventually be reached between the US and Iran. Although the US failed to reach an agreement with Iran over the weekend, prompting President Trump to announce a blockade targeting Iranian oil shipments, Trump later stated that Iran had reached out and is now seeking to resume negotiations. Meanwhile, a report from OPEC+ showed the cartel's output declined 7.9 million barrels per day in March due to the closure of the Strait. Also, Saudi Arabia said it has restored full pumping capacity through its East-West pipeline to the Red Sea, along with output from the Manifa field.