Aerial view of the Chevron El Segundo Refinery, one of California’s largest oil processing facilities, as seen from above Manhattan Beach, California, April 8, 2026.
Tama Mario | Getty Images
Crude oil prices fell on Tuesday, with the International Energy Agency forecasting “widespread demand destruction” due to deepening supply shortages caused by conflicts in the Middle East and rising average prices.
usa crude oil As of 3:55 a.m. ET, May delivery futures were down 2.74% at $96.37 a barrel. international benchmark brent Oil for June delivery fell 1.03% to $98.34 per barrel.
The conflict has already caused the biggest oil supply disruption in history, with March’s biggest monthly price jump on record, according to the IEA.
Oil prices also fluctuated on Tuesday after reports suggested peace talks between Washington and Tehran could resume as soon as this week after negotiations broke down over the weekend.
The IEA’s latest forecasts show global oil demand could contract by the largest amount since the coronavirus pandemic.
“Oil demand is expected to contract by 80 kilobits per day this year as the Iran war changes the global outlook,” the agency said.
“This is 730 kilobytes per day lower than last month’s report, and the expected decline of 1.5 million kilobytes per day in the second quarter of 2026 will be the steepest since the decline in fuel consumption due to COVID-19.
US crude oil prices since the beginning of the year
“Initially, the most significant reductions in oil use were in the Middle East and Asia-Pacific, primarily for naphtha, LPG and jet fuel. But demand destruction will widen as shortages and prices continue.”
U.S. Vice President J.D. Vance said Monday that the next steps in U.S.-Iranian peace efforts depend on the Iranian government after returning from weekend talks that failed to produce a breakthrough.
“I really think the ball is in Iran’s court whether we have further talks, whether we end up reaching an agreement, because we have a lot of things on the table,” Vance said in an interview on Fox News.
He also noted that the deal could benefit both sides, especially if the U.S. conditions are met regarding Iran’s nuclear program.
This comes after the US began a “blockade” of Iranian ports in the Persian Gulf on Monday. President Donald Trump on Sunday said the United States would close the strait, marking a sharp escalation in tensions after a two-week ceasefire.
U.S. Central Command later announced that the measure would only apply to ships entering or leaving Iranian ports and coastal zones.
Commonwealth Bank of Australia’s Vivek Dar said the blockage was “directly jeopardizing” Iran’s oil exports through the Strait of Hormuz, which reached about 1.7 million barrels a day last month.
“The blockage will therefore further tighten the market for physical oil and refined products,” he said.
