Brent futures declined 95 cents, or 1%, at $94.53, as of 0003 GMT. U.S. West Texas Intermediate (WTI) crude futures for May fell $1.54, or 1.72%, to $88.07. The May contract expires on Tuesday and the more-active June contract was down $1.09, or 1.3%, at $86.37.
Both benchmarks surged on Monday, with Brent up 5.6% and WTI up 6.9%, after Iran again shut the Strait of Hormuz, closing the key oil transport artery, and the U.S. seized an Iranian cargo ship as part of its blockade of the country’s ports.
Still, investors are focusing on the likelihood talks this week will result in the extension of the existing ceasefire or a final agreement, though the chance of further conflict and disruptions to oil flows remains.
Iran is weighing participation in the peace talks in Pakistan, a senior Iranian official told Reuters on Monday, following Islamabad’s efforts to end the U.S. blockade.
The blockade has posed a major hurdle to Tehran rejoining peace efforts, with the current two-week ceasefire set to expire this week. “We continue to lean toward an MOU being signed and/or the ceasefire being extended this week, potentially evolving into a broader agreement,” analysts at Citi said in a note. “That said, we remain prepared to pivot toward a more protracted disruption scenario should negotiations falter this week.” Underscoring the uncertainty around the talks, the Iranian official stressed that no decision has been made to attend, as Iranian Foreign Minister Abbas Araqchi said “continued violations of the ceasefire” by the U.S. is a hindrance to further negotiations.
Separately, Iran’s top negotiator and parliament speaker Mohammad Baqer Qalibaf reiterated that Tehran would not negotiate under threats.
Shipping activity through the Strait of Hormuz, an essential corridor for about one-fifth of the world’s oil supply, remained limited on Monday.
If disruptions to the strait persist for another month, total losses could rise to about 1.3 billion barrels, with prices likely near $110 a barrel in the second quarter of 2026, Citi said.
Kuwait declared force majeure on oil shipments due to the strait’s blockade, Bloomberg News reported.
The higher prices caused by the closure of the strait have cut oil demand by about 3% so far, analysts at Societe Generale said in a client note.
The risk is “skewed toward larger losses the longer normalisation is delayed,” it said, adding it expects “full normalisation” to supply only by late 2026.
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