Key Points:
- Oil prices remained low as the US and Iran plan more peace talks.
- The US continues its blockade of the Strait of Hormuz, halting Iran’s sea trade.
- Iran is considering pausing shipments to avoid challenging the US cordon.
- The conflict caused an unprecedented supply shock, impacting global oil markets.
Oil prices stayed low as the U.S. and Iran looked to arrange a second round of peace talks soon. This comes even as a blockade of the Strait of Hormuz continues to restrict vital energy supplies for the global economy.
Brent crude held steady below $95 a barrel after falling 4.6% on Tuesday, while West Texas Intermediate (WTI) was near $91. Sources familiar with the matter said the goal is to hold more talks before a ceasefire ends next week. One idea is to return to Pakistan for negotiations, but other locations are also being considered.
President Donald Trump mentioned that talks could restart “over the next two days,” as reported by the New York Post. Fox Business anchor Maria Bartiromo said after interviewing Trump that he saw the war as being “very close to over.”
Meanwhile, the U.S. continues its blockade of Hormuz to reduce Iran’s oil exports. Admiral Brad Cooper, commander of U.S. Central Command, praised the action, posting on X that “US forces have completely halted trade going into and out of Iran by sea.”
For its part, Tehran is thinking about pausing shipments through the waterway to avoid challenging the U.S. cordon, according to a person familiar with the situation. Since the war began, Iran has stopped almost all shipping through this key route, which connects the Persian Gulf to wider markets.
The global oil market has been severely shaken by the conflict, which caused an unprecedented supply shock. Soaring prices for crude oil and products like gasoline are hurting consumers and reducing demand, with the International Energy Agency predicting a drop in consumption this year.
Dilin Wu, a research strategist at Pepperstone Group, said, “In the near term, oil is likely to move sideways with a softer bias, as the market digests the shift toward diplomacy.” Wu added that even if geopolitical tensions slightly ease, any significant recovery in physical supply will take time, with logistical problems off Hormuz keeping prices from falling too low.
If the risks of escalation decrease, oil supply from the Middle East might see a “tiered recovery,” with 2 million to 3 million barrels a day of output likely to be restored in the first four weeks, according to ANZ Group Holdings Ltd. To put more pressure on Tehran, the Trump administration will allow a temporary waiver that authorized the purchase of certain Iranian crude to expire this weekend, as confirmed by the Treasury Department.
Rebecca Babin, a senior energy trader at CIBC Private Wealth Group, stated, “Headlines continue to dominate price action, with markets leaning toward a normalization of flows by the end of April. Sustained increases in traffic will be the key signal to watch, alongside the trajectory of negotiations.”
