By: Economy Middle east

Oil prices fell on Tuesday, reversing the previous session’s gains, as markets expected peace talks between the United States and Iran this week could help restore more supply from the Middle East.

Brent crude futures declined 67 cents, or 0.70 percent, to $94.81 a barrel as of 08:29 UAE time. U.S. West Texas Intermediate for May fell 93 cents, or 1.06 percent, to $86.49, while the more-active June contract dropped 76 cents, or 0.9 percent, to $86.66.

Both benchmarks had surged on Monday, with Brent up 5.6 percent and WTI up 6.9 percent, after Iran again shut the Strait of Hormuz, the key oil transport artery, and the United States seized an Iranian cargo ship as part of its blockade of the country’s ports.

Investors are now focused on whether talks this week could extend the current ceasefire or lead to a final agreement, although the risk of renewed conflict and further disruption to oil flows remains high.

Peace talks face hurdles

A senior Iranian official told Reuters on Monday that Iran is weighing whether to take part in peace talks in Pakistan, following Islamabad’s efforts to end the U.S. blockade. However, no decision has been made, and Iranian Foreign Minister Abbas Araghchi said that continued U.S. violations of the ceasefire remain an obstacle to further negotiations.

Iran’s top negotiator and Speaker of Parliament Mohammad Baqer Qalibaf also said Tehran would not negotiate under threats.

Shipping through the Strait of Hormuz, which carries about one-fifth of global oil supply, remained limited on Monday. Citi said that if disruptions continue for another month, total losses could rise to about 1.3 billion barrels, with prices potentially near $110 a barrel in the second quarter of 2026.

Kuwait declared force majeure on oil shipments because of the blockade, while analysts at Societe Generale said the higher prices caused by the strait’s closure have reduced oil demand by about 3 percent so far.