U.S. oil prices fall 6% on hope Iran peace talks will continue

Oil prices fell Tuesday, after Vice President JD Vance indicated the U.S. and Iran could meet for another round of peace talks after negotiations failed last weekend.

U.S. crude oil futures for May delivery were down 6% to $93.07 per barrel as of 10:37 a.m. ET. International benchmark Brent for June delivery was down nearly 4% at $95.58 per barrel.

"Whether we have further conversations, whether we ultimately get to a deal, I really think the ball is in the Iranian court, because we put a lot on the table," Vance said in a Fox News interview.

The International Energy Agency forecast Tuesday that the oil supply shock triggered by the Iran war will depress demand this year as consumers respond to surging fuel prices.

It expects oil demand to contract by 1.5 million barrels per day in the second quarter, the biggest drop since the Covid-19 pandemic. Demand is expected to fall by 80,000 bpd for the year, a big swing compared to previous IEA expectations that consumption would grow by 640,000 bpd.

U.S. oil prices year-to-date

Meanwhile, the U.S. commenced a "blockade" of Iranian ports in the Persian Gulf on Monday. President Donald Trump had said Sunday that the U.S. would blockade the strait, marking a sharp escalation following a two-week ceasefire.

United States Central Command later said the measures would apply only to ships entering or leaving Iranian ports and coastal zones.

The blockade "directly endangers" Iran's oil exports through the Strait of Hormuz, which tracked at around 1.7 million barrels per day last month, according to Commonwealth Bank of Australia's Vivek Dhar. 

"Therefore, the blockade tightens physical oil and refined product markets even further," he said.