Crude prices pulled back in early Asian trading on Tuesday as hopes of renewed U.S.-Iran talks took some of the heat out of markets rattled by Washington’s blockade of the Strait of Hormuz.
The pullback follows a volatile Monday session that saw Brent jump more than 4% and WTI climb nearly 3% after the U.S. military widened its blockade of Iranian ports.
The Pentagon confirmed Monday that the blockade has pushed eastward into the Gulf of Oman and the Arabian Sea. Ship-tracking data showed at least two vessels turning back as the restrictions took effect. Tehran, meanwhile, threatened to strike ports in neighbouring Gulf states after weekend talks in Islamabad fell apart.
Even so, the door to negotiations hasn’t fully closed. “Trump has managed to cool the rally by dangling the possibility of a deal,” said Tim Waterer, chief market analyst at KCM Trade.
Sources close to the talks say back-channel communication between Washington and Tehran is still ongoing, and Pakistan’s Prime Minister Shehbaz Sharif vowed to keep pushing for a diplomatic off-ramp.
Trump himself said Monday that Iran “wants to make a deal.” Otherwise, analyst concerns persist. ANZ estimated that about 10 million barrels per day of crude supply have already been sidelined, warning that a prolonged blockade could remove an additional 3–4 million bpd. “The market doesn’t need a worst-case escalation to justify higher prices. Tight balances alone can keep Brent near recent highs,” ANZ noted.
NATO allies, including Britain and France, have refused to back the blockade, pushing instead for the strait to be reopened. U.S. Energy Secretary Chris Wright suggested prices could peak “in the next few weeks” once shipping resumes.
Global institutions, including the IMF, World Bank, and International Energy Agency, called on countries to avoid stockpiling energy supplies or imposing export bans, describing the crisis as the worst shock to energy markets in decades.
IEA chief Fatih Birol said strategic oil releases aren’t needed yet, but made clear the agency won’t hesitate to step in if things deteriorate.
The agency forecast 500,000 barrels per day in its latest monthly report, citing weaker consumption. This adjustment further highlights the ongoing market uncertainty.
