-- EMEA crude futures retreated in after-hours trading on Tuesday as reports of the US and Iran reviving peace talks offset the impact of the Strait of Hormuz blockade, while the International Energy Agency warned that the conflict will wipe out global demand growth.
Brent crude futures dropped by 4.18% to $95.21 per barrel, while Murban oil futures were down 2.45% to $100.80/bbl.
"Oil slipped back below $100 after Monday's rebound faded, amid tentative signs that Washington and Tehran may seek to revive previously stalled peace talks," Saxo Bank strategists said on Tuesday.
The analysts said President Trump said Tehran initiated contact, while Iran's President Pezeshkian expressed conditional readiness for dialogue.
Iran is reportedly considering a short-term pause in its shipments through the Hormuz to avoid testing a US blockade and ruining a fresh round of peace talks, as the negotiating teams from the two sides are expected to return to the Pakistani capital, Islamabad, this week.
The two sides are expected to hold talks before the expiration of a two-week ceasefire announced on Apr. 7.
Meanwhile, the International Energy Agency said Tuesday that the Middle East conflict is set to wipe out oil demand growth in 2026, resulting in the first annual decline since the Covid-19 pandemic.
The IEA expects global oil demand to contract by 80,000 barrels per day this year, 730,000 b/d less than the agency's previous projection that consumption would grow by 640,000 b/d.
On the supply side, OPEC said on Monday that crude production in the Arabian Gulf plunged in March due to the ongoing Middle East conflict.
Iraq took the biggest hit, with production dropping from 4.2 million b/d in February to 1.6 million b/d in March, followed by Kuwait and the UAE, which registered month-over-month drops of 1.4 million b/d and 1.5 million b/d, respectively.
The latest OPEC data showed that Saudi Arabia's production dropped by 2.3 million b/d, from 10.1 million b/d to 7.8 million b/d.
Last month, the IEA said attacks on energy infrastructure in the Middle East and the effective closure of the Hormuz have led to the largest oil supply disruption in history, with 10.1 million b/d lost in March.
The US Navy commenced the blockade of Iranian ports and the Hormuz at 10 a.m. ET on Monday.
ING strategists said that, despite the blockade, two fuel tankers attempted to exit the Arabian Gulf via routes near Iran's coastline.
The US Central Command said that over 10,000 army personnel, along with over a dozen warships and dozens of aircraft, are enforcing the blockade.