West Texas Intermediate (WTI) crude oil prices declined after modest gains the previous day, trading around $85.40 per barrel during Asian hours on Tuesday [1]. The easing of supply concerns is attributed to reports that Iran will send a delegation to Islamabad for a second round of talks with the US before the current truce expires [1]. US President Donald Trump stated that Vice President JD Vance will travel to Pakistan to resume negotiations, potentially as soon as Tuesday night or Wednesday morning [1]. Trump also warned that the truce is unlikely to be extended if no deal is reached this week, and the Strait of Hormuz will remain blocked until an agreement is secured [1].
Shipping traffic through the Strait of Hormuz slowed sharply on Monday following weekend tensions, including Iran firing warning shots at vessels and the US military seizing an Iranian cargo ship [1]. Ship-tracking data revealed only one vessel exiting and two entering the Gulf over a 12-hour period, significantly below the typical daily flow of around 130 ships [1]. Kuwait has declared force majeure on oil shipments due to the blockade, according to Bloomberg [1]. Societe Generale analysts estimate that oil demand has already fallen by about 3% [1].
Citi, cited by Reuters, noted that if disruptions persist for another month, losses could reach approximately 1.3 billion barrels, with prices potentially nearing $110 in Q2 2026 [1]. The ongoing blockade and reduced shipping activity have heightened concerns about global oil supply and price volatility [1].
The market is closely watching the outcome of the US-Iran talks, as the resolution or continuation of the blockade will have significant implications for oil prices and supply chains. Analyst opinions suggest that prolonged disruptions could lead to substantial price increases and supply shortages [1].
CONCLUSION
WTI oil prices are subdued amid heightened geopolitical tensions and supply disruptions linked to the Strait of Hormuz blockade. The outcome of US-Iran negotiations is critical, with analysts warning that continued disruptions could drive prices significantly higher and impact global oil supply. Market participants remain cautious, awaiting further developments.