Oil prices declined as expectations of renewed U.S.–Iran talks reduced fears of supply disruptions.

Oil prices slipped in early Asian trading on Tuesday as renewed hopes for U.S.–Iran negotiations eased worries about supply disruptions linked to the U.S. blockade of the Strait of Hormuz.

Brent crude dropped $1.86 (1.87%) to $97.50, while WTI fell $2.25 (2.27%) to $96.83. This pullback followed strong gains in the previous session, when prices surged after the U.S. launched a blockade of Iran’s ports.

The U.S. military expanded the blockade beyond the strait into the Gulf of Oman and the Arabian Sea, with early signs of disruption already visible as ships began turning back. In response, Iran warned it could target ports in neighboring Gulf countries after weekend talks in Islamabad failed to produce a resolution.

Despite the breakdown, optimism lingered as both sides signaled a willingness to keep negotiations alive. Analysts noted that even the hint of a potential deal helped cool the rally in oil prices.

Market estimates suggest roughly 10 million barrels per day of supply have already been affected, with the risk of further losses if the blockade continues. Still, analysts argue that tight supply conditions alone may be enough to keep prices elevated.

Meanwhile, NATO allies such as Britain and France declined to support the blockade, instead pushing for the reopening of the key shipping route. U.S. officials indicated prices could peak in the coming weeks if flows resume.

Global institutions, including the IMF, World Bank, and IEA, urged countries to avoid hoarding or restricting exports, warning of a major shock to the energy market. OPEC also trimmed its global demand forecast for the second quarter by 500,000 barrels per day.

Sources: Reuters