Oil prices retreated on Tuesday, easing from recent highs as renewed diplomatic overtures between the United States and Iran offered a glimmer of hope for stabilizing energy markets.
Global benchmark Brent crude slipped 0.2% to $99.14 per barrel, while U.S.-traded oil fell more sharply by 1.6% to $97.48. The decline followed a volatile session on Monday, when prices briefly surged above $100 after President Donald Trump announced a naval blockade of Iranian ports following failed weekend negotiations.
In a notable shift, Trump indicated on Monday that Tehran had reached out to Washington, expressing a strong desire to negotiate. "I can tell you we've been called by the other side. They'd like to make a deal very badly," the president told reporters outside the White House.
Separate reports suggest that behind-the-scenes discussions have continued. According to sources cited by The New York Times, Iran recently proposed suspending its uranium enrichment activities for up to five years—an offer the U.S. rejected, insisting on a 20-year halt. While the two sides remain far apart, the exchange of proposals signals that diplomatic channels remain open, with a potential second round of face-to-face talks under consideration.
Analysts say the market reaction reflects cautious optimism. "Trump's comments may be seen as a sign of possible de-escalation," noted Jiajia Yang, an associate professor at Australia's James Cook University. "Traders are also making a short-term correction after yesterday's surge."
However, the underlying tensions continue to cast a long shadow over global energy supplies. The International Energy Agency (IEA) warned that the situation remains severe. "April may well be even worse than March," said IEA Executive Director Fatih Birol, explaining that cargoes shipped in March were loaded before the crisis, whereas April has seen virtually no new shipments. The IEA reported that global oil supplies fell by 10.1 million barrels per day in March—the largest disruption in history.
In response, IEA member countries have already released 400 million barrels from strategic reserves, and Birol indicated readiness to deploy more if needed. "We have still 80% in our pocket," he said.
The Strait of Hormuz—a critical chokepoint for nearly one-fifth of global oil and gas shipments—has become a focal point in the conflict. Iran has threatened to attack vessels attempting to transit the strait in retaliation for U.S.-Israeli strikes that began on February 28. U.S. Energy Secretary Chris Wright predicted that oil prices could peak in the coming weeks if the waterway remains effectively closed.
Despite the modest direct contribution of Iranian oil to global supplies, experts warn that any escalation affecting other Gulf shipments could send prices soaring again. "Prices will rise if the U.S. blockade escalates the conflict," said Rahman Daiyan, an energy researcher at the University of New South Wales.
Amid the uncertainty, some energy companies are positioning for volatility. Oil giant BP announced on Tuesday that its trading division expects "exceptional" results for the first quarter of 2026, a stark reversal from weak performance in late 2025.
Asian markets, which are particularly sensitive to energy price swings, rallied on the news. Japan's Nikkei 225 gained 2.4%, while South Korea's Kospi rose 2.7%.
As diplomats weigh next steps, markets remain on edge—balancing fragile hopes for peace against the stark realities of a disrupted global energy landscape.