Oil prices fell sharply in early Asian trading on Tuesday as signs of potential US-Iran dialogue reduced concerns about prolonged supply disruptions from the naval blockade of the Strait of Hormuz.
Brent crude futures dropped $1.86, or 1.87%, to $97.50 per barrel, while West Texas Intermediate (WTI) crude fell $2.25, or 2.27%, to $96.83. Both benchmarks had surged more than 4% in the previous session after the United States began actively blocking Iran’s ports.
ANZ analysts estimate approximately 10 million barrels per day of crude supply have been effectively removed from global markets since the blockade began. However, sources described dialogue between Washington and Tehran as “still alive,” with Pakistan’s Prime Minister Sharif affirming continued de-escalation efforts.
OPEC has also revised down its second-quarter global demand forecast by 500,000 barrels per day, citing the economic impact of the conflict on trade flows and consumer confidence.
The price retreat offers potential relief for Sri Lanka, which has been grappling with a fuel rationing crisis exacerbated by Hormuz disruptions. Oil had crossed the $100 per barrel threshold after the US naval blockade was activated on April 13, raising fears of a sustained price shock.
However, analysts caution that the decline may be short-lived if talks break down again. The previous Pakistan-brokered ceasefire collapsed within hours, and Iran has yet to respond formally to renewed diplomatic overtures.
