Trump says Iran war "close to over" amid hopes for more negotiations
HOUSTON, April 14 (Reuters) - Oil prices dropped on Tuesday on hopes Iran will resume talks with the U.S. and Israel to end the conflict that has shut the Strait of Hormuz, one of the world’s major waterways for transporting crude and refined products.
Brent crude futures settled at $94.79 a barrel, down $4.57, or 4.6%. U.S. West Texas Intermediate crude finished at $91.20, down $7.80, or 7.87%.
Both benchmarks rose in the previous session, with Brent climbing more than 4% and WTI nearly 3% after the U.S. military began a blockade of Iranian ports.
"There seems to be this hope in the market there is going to be a better outcome," said John Kilduff, partner with Again Capital. "All of this means the market had earlier priced in a lot of the disruption we’ve already seen."
Brent prices are more susceptible to global supply disruptions than are WTI prices, which reflect what is shipped domestically within the U.S. and to Central and South America.
While talk of a resumption in U.S.-Iran talks put downward pressure on prices, the move lower ignores the loss of physical barrels of oil that are not moving, said PVM Oil Associates analyst Tamas Varga.
Attacks on energy infrastructure in the Middle East and Iran’s effective closure of the Strait of Hormuz have led to the largest oil supply disruption in history, the International Energy Agency said in its monthly report, with 10.1 million barrels per day lost in March.
"Resuming flows through the Strait of Hormuz remains the single most important variable in easing the pressure on energy supplies, prices and the global economy," the IEA said.
The U.S. military said on Monday that its blockade of the Strait of Hormuz would extend east to the Gulf of Oman and the Arabian Sea. Ship-tracking data showed that two ships turned around in the strait as the blockade started. However, three Iran-linked tankers entered the Gulf and were allowed to pass because their destinations were not Iranian ports, shipping data showed.
Iran threatened to respond to the blockade by attacking ports in nations bordering the Gulf.
Meanwhile, negotiating teams from the U.S. and Iran could return to Islamabad this week, five sources told Reuters. A U.S. official also said there was continued engagement on trying to achieve an agreement, while Pakistani Prime Minister Shehbaz Sharif said efforts were still under way.
"In case talks between the adversaries fail to bear fruit, even revisiting the March highs cannot be ruled out as the decline in global oil inventories might spill into the third quarter and beyond," PVM’s Varga said.
The IEA sharply cut its forecasts for global oil supply and demand growth, with the demand growth forecast for 2026 trimmed by 80,000 bpd and supply now expected to decline by 1.5 million bpd.
Meanwhile, planned Russian oil product exports from the Black Sea port of Tuapse for April have been revised upwards by about 60%, to 1.27 million metric tons from 0.794 million tons in the preliminary plan, according to two traders and Reuters calculations.
