Oil Prices Drop Amid U.S. Blockade on Iran and Ceasefire Uncertainty

Oil prices declined sharply during early Asian trading on Tuesday as investors weighed geopolitical risks surrounding Iran and the possibility of renewed ceasefire negotiations. West Texas Intermediate crude futures dropped 2.1%, settling at $90.98 per barrel by 19:22 ET.

The sell-off came after crude prices surged on Monday but closed well below intraday highs. U.S. President Donald Trump announced that 34 ships had transited the Strait of Hormuz before the American blockade took effect — the highest volume recorded since the Iran war began in late February. Despite this, shipping data from MarineTraffic.com indicated that most vessels were avoiding the strategic waterway as of Tuesday morning, with only a handful of oil tankers and cargo ships navigating the route over the past two days.

The United States launched its blockade of Iranian ships and ports on Monday after weekend peace talks between Washington and Tehran collapsed without progress. Disputes over Iran's nuclear enrichment program, the full reopening of Hormuz, and Tehran's continued support for groups like Hezbollah were among the primary sticking points. Iran declared it had no intention of returning to the negotiating table, while Trump expressed indifference toward renewed dialogue. Nevertheless, several nations across Asia and the Middle East were reportedly working to facilitate fresh ceasefire discussions.

A fragile two-week ceasefire between the two countries appeared to remain intact as of Tuesday, with no new military strikes reported since at least Sunday.

Crude oil prices had posted record monthly gains in March after the U.S.-Iran conflict disrupted roughly 20% of global oil supplies. Iran's effective closure of the Strait of Hormuz and coordinated attacks on energy infrastructure throughout the Middle East triggered widespread production halts, sending markets into turmoil and driving prices to historic highs.