Oil prices eased on Tuesday as markets priced in expectations that U.S.–Iran peace talks will move ahead this week, raising hopes that more Middle East supply can start flowing again, despite still‑tense negotiations.
Price Moves
Brent crude futures slipped 95 cents, or about 1%, to $94.53 a barrel, while U.S. West Texas Intermediate (WTI) for May fell around 1.7% to $88.07. The more active June WTI contract also dipped roughly 1.3% to $86.37, unwinding some of Monday’s sharp gains triggered by fresh Strait of Hormuz closures and a U.S. seizure of an Iranian cargo ship.
Market Sentiment
Investors are focused on whether this week’s talks—spearheaded by Pakistan—will either extend the current two‑week ceasefire or produce a broader deal that lifts the U.S. naval blockade and restores steady shipping through the Hormuz corridor, which handles about one‑fifth of global oil flows. Analysts at Citi say the base case still leans toward a short‑term deal or extension, but they remain ready to switch to a “protracted disruption” scenario if talks collapse.
Risks and Fragility
Iran has not yet confirmed attendance, and Tehran continues to insist it will not negotiate “under threats,” highlighting the fragility of the process. If the Strait of Hormuz stays heavily disrupted for another month, analysts warn that cumulative lost supply could reach around 1.3 billion barrels, pushing prices closer to $110 per barrel again in the second quarter of 2026.
