- media@moneyinfocus.news
Crude oil futures dropped sharply on Tuesday, reversing recent gains as signs of renewed diplomatic engagement between the United States and Iran weighed on market sentiment, despite one of the largest supply disruptions in modern energy markets.
Front-month West Texas Intermediate (WTI) crude fell 7.9% to $91.28 per barrel, its lowest settlement in three weeks, while Brent crude declined 4.6% to $94.79 per barrel. The selloff reflects growing expectations that a second round of U.S.-Iran talks could take place before the current ceasefire deadline next week, potentially easing geopolitical tensions.
The price decline comes even as physical supply constraints intensify. According to the International Energy Agency, global oil markets lost approximately 10.1 million barrels per day in March, marking the largest disruption on record. The shortfall follows escalating conflict in the Middle East and Iran’s effective closure of the Strait of Hormuz—one of the world’s most critical energy transit chokepoints.
The U.S. military has moved to enforce a naval blockade targeting Iranian oil exports, deploying a significant force under United States Central Command. More than a dozen warships, over 100 aircraft, and upwards of 10,000 personnel are currently involved in the operation. Officials reported that no vessels passed through the restricted zone in the first 24 hours, with at least six ships turning back after being warned.
Prior to the blockade, Iran was exporting roughly 1.5 million barrels per day, underscoring the magnitude of the supply now effectively removed from global markets.
Still, analysts note that markets are reacting more to the potential for diplomatic resolution than to current supply realities. “Even a glimmer of negotiating progress can easily spark a dramatic price decline,” Ritterbusch analysts said in a note, highlighting how forward-looking expectations continue to dominate price action.
Tamas Varga of PVM Oil Associates echoed this view, noting that the selloff appears disconnected from the underlying loss of physical barrels. The market, he suggested, is pricing in a scenario where a revived nuclear agreement could ultimately reopen the Strait of Hormuz and restore flows.
Adding to the pressure, the U.S. is expected not to renew a sanctions waiver on Iranian oil shipments set to expire this week. A similar waiver tied to Russian oil reportedly lapsed over the weekend, further tightening the geopolitical backdrop.
Natural gas markets followed oil lower, with U.S. futures declining for a fifth consecutive session. Prices settled at $2.599 per MMBtu, the lowest since October 2024, as mild weather forecasts point to subdued demand and rising inventories.
Equity markets reflected the downturn in energy prices. Shares of major oil and gas producers—including APA, Occidental Petroleum, Devon Energy, Coterra Energy, and ConocoPhillips—were among the biggest decliners in the S&P 500 on the day.
