WASHINGTON (dpa-AFX) - Reversing the gains from yesterday, crude oil went for a freefall on Tuesday as demand-related concerns cooled after U.S. President Donald Trump indicated a second round of talks with Iran could happen in the coming days. In addition, the International Energy Agency's report cautioning on crude oil 'demand destruction' weighed on prices.
WTI Crude Oil for May month delivery was last seen trading down by $7.18 (or 7.25%) at $91.90 per barrel.
Saturday's marathon peace talks between the U.S. and Iran in Pakistan to end the gulf war were termed as a 'failure' by Trump on Sunday, reviving supply-related concerns and pushing oil prices higher.
While Trump stated that Iran refused to stop its nuclear programs as demanded by the U.S., Iran stated that 'U.S. maximalism' caused the collapse of the talks.
Following this, Trump ordered U.S. naval forces (stationed near Iran) to block all ships entering or exiting Iranian ports through the Strait of Hormuz, intending to cripple Iran's economy and thereby compel it to agree to U.S. demands.
Trump also warned of quick and brutal elimination of any Iranian navy ship approaching the region.
Iran retaliated, stating that no port in the gulf region would be spared if the U.S. aggression continues.
Meanwhile, citing two anonymous officials, Reuters reported on the possibility of the resumption of U.S.-Iran talks.
Later in a telephone interview with the New York Post, Trump admitted that talks could be happening over the next two days and that the U.S. delegation would be going to Pakistan again.
Oil prices tumbled on the prospects of a resolution to the gulf conflict along with the chances of reopening the Strait of Hormuz.
On the data front, in its latest forecast, the Paris-based International Energy Agency cautioned that amid growing supply scarcity and rising crude oil prices, 'demand destruction will spread' for oil.
Its latest projection states that oil demand is expected to contract by 80,000 barrels per day this year (the greatest since the Covid-19 pandemic) against the backdrop of the ongoing U.S.-Iran conflict.
Yesterday, in its monthly oil report, the Organization of Petroleum Exporting Countries lowered its world oil demand forecast for the second quarter 2026 by 500,000 barrels per day.
Demand is expected to average 105.07 million bpd over the same period. However, the group expects a rebound in consumption in the later months of 2026.
The report pointed out a sharp drop in production from February to March in Saudi Arabia (10.1 million bpd to 7.8 million bpd) and Iraq (4.2 million bpd to 1.6 million bpd).
The decline was prominent in the United Arab Emirates (by 44%) and Kuwait (by 53%) as well.
On a month-on-month basis, OPEC's overall production plunged by 27% from 28.7 million bpd to 20.8 million bpd.
Iran's production dropped around 5.0%, from 3.24 million bpd to 3.06 million bpd month over month.
In a joint statement after a meeting yesterday, the heads of the International Energy Agency, the International Monetary Fund, and the World Bank Group called on countries to avoid stockpiling energy resources.
Last month, the Paris-based IEA coordinated the release of 400 million barrels from the emergency stocks of its member nations.
The U.S. dollar index was last seen trading at 98.09, down by 0.25 points (or 0.25%) today.
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