Oil prices continue to fall on hopes of new US-Iran peace talks
Oil prices continue to fall on hopes of new US-Iran peace talks
Tuesday saw a decline in oil prices as optimism around renewed diplomatic discussions between the US and Iran tempered fears of further supply disruptions. Global benchmark Brent crude fell 3.8% to $95.54 per barrel, while US-based West Texas Intermediate dropped 6.1% to $92.85. This reversal followed a sharp rise above $100 per barrel on Monday, which had been driven by uncertainty after US President Donald Trump imposed a blockade on Iran’s ports following stalled weekend negotiations.
Peace talks and market reactions
Trump later indicated that Tehran had reached out to Washington about a potential agreement. Speaking to reporters outside the White House, he stated:
“I can tell you we’ve been called by the other side. They’d like to make a deal very badly.”
The tentative dialogue, however, did not immediately stabilize prices, with traders still evaluating the situation.
The New York Times reported that Iran proposed halting uranium enrichment for five years, an offer the US dismissed, demanding a 20-year suspension. The report, based on Iranian and US official sources, noted that both sides had exchanged proposals on nuclear activity during talks in Pakistan. Despite no formal agreement, the exchange suggested a possible second round of direct negotiations could emerge.
IEA warns of prolonged supply strain
Meanwhile, the International Energy Agency (IEA) highlighted that March marked the largest oil supply disruption in history, with global output dropping 10.1 million barrels per day to 97 million barrels per day. Last month, all 32 IEA members agreed to release 400 million barrels of stockpiles to mitigate shortages. Fatih Birol, the agency’s executive director, emphasized that April might be more challenging than March, as no new cargoes are being loaded during the current crisis. “The longer the disruption is, the more severe the problem becomes,” he noted.
Birol also mentioned that the 400 million barrels released were only 20% of the IEA’s reserves, leaving 80% available for future action. “We are assessing the decision. If and when we decide it is the time, we are ready to act and act immediately,” he added.
Analyst perspectives on market shifts
Lindsay James, an investment strategist at Quilter, attributed the price drop to “glimmers of hope that both sides remain keen to make a lasting peace deal.” She highlighted that the prospect of further talks and Iran’s decision to pause shipments rather than test the US blockade helped ease market tensions. “Traders may also have been encouraged by signs that some sanctioned tankers appeared to clear the Strait of Hormuz earlier today but later reversed course,” James said, noting possible data errors or broader US military influence.
Jiajia Yang, an associate professor at Australia’s James Cook University, viewed Trump’s comments as a “sign of possible de-escalation.” He suggested that traders might be adjusting their positions after Monday’s price surge, which had been fueled by heightened geopolitical risks.
Rahman Daiyan, an energy researcher at the University of New South Wales, pointed out that while Iran contributes only a modest portion to global oil supply, any escalation of the blockade could impact Gulf shipments and drive prices higher. Some companies, like BP, are anticipating this shift, with the oil giant expecting its trading division to report “exceptional” results for the January-March period. This contrasts sharply with the weak performance of its trading segment in the final three months of 2025.
Asian stock markets rose on Tuesday, reflecting broader investor sentiment toward potential stabilization in the Middle East. However, the IEA’s warning about ongoing supply challenges and the unresolved tensions between the US and Iran suggest markets remain cautious.
