Oil prices ease on hopes of new US-Iran peace talks

Oil prices ease on hopes of new US-Iran peace talks

Tuesday saw a decline in oil prices as optimism about renewed dialogue between the US and Iran helped alleviate worries about potential supply interruptions. Global benchmark Brent crude fell approximately 1% to $98.40 per barrel, while US crude dropped 1.7% to $97.40. President Donald Trump noted that Tehran had reached out to Washington regarding a potential agreement. Earlier in the week, oil prices had surged above $100 per barrel after Trump’s order to block Iran’s ports following stalled weekend negotiations.

Speaking to reporters outside the White House on Monday, Trump stated, “I can tell you we’ve been called by the other side. They’d like to make a deal very badly.”

Separately, the New York Times reported that Iran had suggested halting uranium enrichment for up to five years, an offer the US rejected, insisting on a 20-year suspension. According to the report, which referenced Iranian and US officials, both sides had exchanged proposals during talks in Pakistan, yet a consensus remained elusive. However, the discussion hinted at a potential pathway to a peace deal, with a possible second round of direct negotiations.

The BBC sought comment from the White House. Jiajia Yang, an associate professor at Australia’s James Cook University, suggested that Trump’s remarks could signal “possible de-escalation.”

The International Energy Agency (IEA) head indicated that current oil prices do not fully capture the Middle East’s ongoing challenges. Although prices have fallen from Monday’s peak, crude oil remains significantly higher than the $73 level seen before the Iran conflict began on 28 February.

IEA executive director Fatih Birol remarked, “April may well be even worse than March, because during the month of March, we have already received cargoes which were loaded well before the crisis started… and during the month of April, nothing is being loaded.”

Birol added, “The longer the disruption is, the more severe the problem becomes.” Last month, all 32 IEA members agreed to release 400 million barrels of oil to ease supply issues. He noted that this amount represents only 20% of their total reserves, with 80% still available for potential intervention.

Oil traders are also considering the impact of the US blockade on global supplies. Rahman Daiyan, an energy resources researcher at the University of New South Wales in Sydney, mentioned that Iran contributes a “modest” portion to the global oil supply. Prices could increase if the conflict escalates, affecting other Gulf shipments, he said.

Asian stock markets rose on Tuesday. Japan’s Nikkei 225 index climbed 2.6%, while South Korea’s Kospi exchange surged over 3%. Nations heavily dependent on Gulf energy have been significantly impacted by the Iran war’s consequences.

The Strait of Hormuz has emerged as a critical point of tension after Iran threatened to attack vessels using the waterway following US-Israeli strikes since 28 February. Energy prices have risen as nearly a fifth of global oil and gas shipments typically pass through the strait.

On Monday, US Department of Energy Secretary Chris Wright told the Semafor World Economy Forum in Washington, “We’re going to see energy prices high – and maybe even rising – until we get meaningful ship traffic through the Strait of Hormuz. That’ll probably hit the peak oil price at that time. That’s probably sometime in the next few weeks.”