Crude prices dropped on Tuesday on hopes Iran will resume talks with the US and Israel to end the conflict that has shut the Strait of Hormuz.
Brent crude futures settled at $94.79 a barrel after losing $4.57 or 4.6 per cent, and the US West Texas Intermediate crude finished at $91.20 per barrel after it shed $7.80 or 7.87 per cent.
Talk of a resumption in US-Iran discussions put downward pressure on prices, ignoring the loss of physical barrels of oil that are not moving.
Reuters reported that negotiating teams from the US and Iran could return to Islamabad, Pakistan, this week amid continued engagement on trying to achieve an agreement.
The International Energy Agency said in its monthly report that attacks on energy infrastructure in the Middle East and Iran’s effective closure of the Strait of Hormuz have led to the largest oil supply disruption in history. It said over 10 million barrels per day were lost in March.
The IEA said resuming flows through the Strait of Hormuz remains the single most important variable in easing the pressure on energy supplies, prices and the global economy. The waterway is used for transporting crude and refined products, largely to Asia.
The IEA sharply cut its forecasts for global oil supply and demand growth, with the demand growth forecast for 2026 trimmed by 80,000 barrels per day and supply now expected to decline by 1.5 million barrels per day.
The US military said on Monday that its blockade of the Strait of Hormuz would extend east to the Gulf of Oman and the Arabian Sea. With two ships reportedly turned around in the strait as the blockade started. However, three Iran-linked tankers entered the Gulf and were allowed to pass because their destinations were not Iranian ports.
Iran threatened to respond to the blockade by attacking ports in nations bordering the Gulf.
Before the outbreak of the US-Iran war in late February, around 130 vessels transited the Strait daily. Traffic has since slowed to a trickle, and ships must now navigate both US naval oversight and Iranian directives.
The American Petroleum Institute (API) estimated that crude oil inventories in the US rose 6.10 million barrels in the week ending April 10. In the week prior, US crude oil inventories rose by 3.719 million barrels. Official data from the Energy Information Administration (EIA) will be released later on Wednesday.