Oil Prices Fall As Markets Weigh US-Iran Peace Talks This Week

Oil prices fell on Tuesday as markets weighed expectations that peace talks between the United States and Iran would take place this week and allow more supply to flow from the key Middle East producing region.

Reuters reported that Brent futures declined 95 cents, or 1%, at $94.53, as of 0003 GMT, while U.S. West Texas Intermediate (WTI) crude futures for May fell $1.54, or 1.72%, to $88.07.

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The May contract expires on Tuesday, and the more-active June contract was down $1.09, or 1.3%, at $86.37, Reuters said.

The same Reuters reporting said both benchmarks surged on Monday, with Brent up 5.6% and WTI up 6.9%, after Iran shut the Strait of Hormuz and the U.S. seized an Iranian cargo ship as part of its blockade of the country’s ports.

The market focus, Reuters added, was on whether the talks would extend the existing ceasefire or produce a final agreement, even as the chance of further conflict and disruptions to oil flows remained.

Citi analysts told Reuters, “We continue to lean toward an MOU being signed and/or the ceasefire being extended this week, potentially evolving into a broader agreement,” while warning that they remained prepared “to pivot toward a more protracted disruption scenario should negotiations falter this week.”

The price moves were tied to a fast-moving diplomatic timetable and ongoing shipping disruptions through the Strait of Hormuz.

KSAT said the war had disrupted transport of oil through the Strait of Hormuz, described as “a vital waterway that usually is fully open to international shipping,” pushing oil prices sharply higher.

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The same report said U.S. President Donald Trump demanded that vessels again be allowed to transit the strait unimpeded, imposing a blockade on Iranian ports, and that he said Vice President JD Vance will visit Pakistan’s capital Islamabad for talks with Iran.

KSAT also pointed to a specific deadline: “The next big deadline is looming on Tuesday night at 8 p.m. Eastern time, which is early Wednesday Tehran time, when a ceasefire agreement between the United States and Iran is scheduled to expire.”

The Independent similarly said the ceasefire is due to expire on Wednesday evening Washington time and described markets betting that the U.S. and Iran would resume negotiations before then.

In parallel, Al Jazeera reported that a two-week ceasefire between Washington and Tehran is set to expire on Wednesday if the sides cannot agree on an extension, and it said an initial round of talks held in Islamabad earlier this month broke down without any agreement.

The sources describe sharp differences in how each side frames the negotiations and the blockade.

“Ammon News - Oil prices fell on Tuesday, reversing gains in the previous session, on expectations peace talks between the U”

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The Independent quoted Mizuho Bank saying, “The current dynamic is one of a precarious balance of truce,” and it said the “all-consuming question” was whether both sides could “seize on the talks to land on a US-Iran deal that ends the war.”

It also reported that Donald Trump said in an interview with Bloomberg that JD Vance would travel to Islamabad Tuesday night or Wednesday morning to resume direct talks, while adding that Tehran made no immediate commitment to attend.

The Independent then quoted Trump’s social media claim that “THE BLOCKADE, which we will not take off until there is a 'DEAL', is absolutely destroying Iran,” and it said he claimed the country was losing $500m a day.

Iran’s parliament speaker Mohammad Bagher Ghalibaf rejected that framing, writing on X: “Trump, by imposing a siege and violating the ceasefire, seeks to turn this negotiating table into a table of surrender or to justify renewed warmongering,” and “We do not accept negotiations under the shadow of threats.”

Al Jazeera reported that Iranian state news outlet IRNA said Tehran would not participate in the talks, citing the US blockade and Washington’s “excessive demands” and “unrealistic expectations.”

While oil prices shifted with the negotiation outlook, equity markets showed a more mixed response across regions.

KSAT said oil prices slipped and shares were mostly higher Tuesday in Europe and Asia as U.S.-Iran talks aimed at ending the war remained in doubt.

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It reported Brent crude dipped 0.7% to $94.81 and U.S. benchmark crude oil lost 0.9% to $86.63 per barrel, while Germany’s DAX rose 0.6% to 24,558.9 and the CAC 40 in Paris was little changed at 8,333.05.

KSAT also said Britain’s FTSE 100 edged 0.1% higher to 10,620.92 and that Tokyo’s Nikkei 225 climbed 0.9% to 59,349.17, with tech-related companies such as Tokyo Electron rising 3.5%.

In Asia, KSAT reported SoftBank Group Corp. gained 8.5%, South Korea’s Kospi jumped 2.7% to 6,388.47, and Taiwan’s Taiex advanced 1.8%, while the Hang Seng in Hong Kong gained 0.5% to 26,481.48 and the Shanghai Composite added 0.1% to 4,085.08.

The Independent described Asian equity markets as largely shrugging off uncertainty, saying South Korea’s Kospi rose 2.1% to hit a fresh record high for the first time since the war began and Japan’s Nikkei climbed 1.2%.

The financial stakes described by the sources extend beyond near-term price moves to potential supply losses, demand impacts, and policy actions.

Reuters reporting in yalibnan said that if disruptions to the strait persist for another month, total losses could rise to about 1.3 billion barrels, with prices likely near $110 a barrel in the second quarter of 2026, citing Citi.

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It also said Kuwait declared force majeure on oil shipments due to the strait’s blockade, with Bloomberg News reporting that move.

Societe Generale analysts told Reuters that higher prices caused by the closure of the strait have cut oil demand by about 3% so far, and it said the risk is “skewed toward larger losses the longer normalisation is delayed,” adding it expects “full normalisation” to supply only by late 2026.

The Independent added that shipping traffic through the strait remains severely disrupted, with up to 10 million barrels a day of crude still shut in, pushing up freight prices and insurance costs.

Daily Sabah reported that only three vessels transited the waterway over the past 12 hours, citing a Reuters report, and said IRIB cited Iranian sources as saying “there are currently no plans to participate in the next round of Iran-U.S. talks” in Pakistan.