Crude prices fell sharply on Tuesday as traders weighed a trio of bearish signals: hopes for a fresh round of US-Iran talks, an IEA warning that high prices are destroying demand, and growing cracks in the naval blockade of the Strait of Hormuz.
Brent crude dropped 1.5% to $97.85 a barrel. WTI fell 3.3% to $95.94, pulling both benchmarks well below the $103 level they reached when the US Navy began enforcing its blockade of Iranian ports a day earlier.
Trump says Iran called
President Donald Trump told reporters at the White House on Monday afternoon that Iranian officials had reached out about restarting negotiations.
"We've been called by the other side. They'd like to make a deal very badly," Trump said. He added that the sticking point remained nuclear, and warned that if no deal is reached before the truce expires, it "won't be pleasant for them."
Pakistan has offered to host a second round of talks in Islamabad, where VP Vance and Iranian negotiators spent 21 fruitless hours last week. The ceasefire expires on April 22, leaving just over a week for both sides to get back to the table.
Tehran not playing along
Iran showed little sign of softening. Crowds gathered across Tehran to protest the naval blockade, with demonstrators calling the US operation an act of piracy. State officials echoed that language.
The negotiating gap has barely narrowed. Washington wants Iran to give up its nuclear weapons program and reopen the Strait of Hormuz without conditions. Tehran demands the blockade be lifted, sanctions removed, and its right to charge transit fees through the strait recognized.
Blockade springs leaks
The waterway is technically open but barely functioning. Only 21 vessels crossed the strait on Sunday, a sliver of the roughly 130 daily transits that were normal before the conflict began on February 28.
But cracks appeared on Tuesday. Three vessels transited despite overlapping US and Iranian naval operations, and a sanctioned Chinese tanker slipped through earlier in the day without being intercepted. The Pentagon says the blockade targets only ships heading to or from Iranian ports, but the Rich Starry's unopposed passage rattled confidence in enforcement.
IEA sees demand crumbling
The IEA's April report landed the third blow. The agency warned that sustained high prices are destroying consumption faster than expected, projecting global oil demand will shrink by 80,000 barrels per day this year. That would mark the first annual contraction since the pandemic, with a 1.5 million barrel per day decline expected in the second quarter alone.
Asian stock markets rallied on the mix of signals. Japan's Nikkei 225 rose 2.5%, South Korea's KOSPI gained 3.7%, and Singapore's Straits Times Index climbed 0.6%. Wall Street's S&P 500 had finished the previous session up 1%.