Brent Falls Below $100 as Second Round of US-Iran Talks Targets Thursday, Pakistan Seeks to Resume Hormuz Diplomacy

Crude oil prices retreated toward $97 per barrel on Tuesday as diplomatic efforts to resume US-Iran negotiations gained momentum, with Pakistan reported to be actively working to organize a second round of direct talks as early as Thursday. The news offered the first meaningful relief to energy markets after a week of sharp gains driven by the US naval blockade of Iranian ports and the collapse of the Islamabad peace summit.

Oil Slips as Diplomacy Advances

Brent crude dropped toward $97 per barrel Tuesday, pulling back sharply from the record near $150 reached by physical cargoes on Monday, while WTI retreated toward $100 from an intraday high above $105 on April 13. Traders responded to reports that two senior US officials confirmed discussions are ongoing about the venue, timing, and composition of delegations for a potential second round of direct negotiations with Iran.

The first round of talks, hosted in Islamabad by Pakistan, collapsed over the weekend after 21 hours of negotiations. Iran's stated demands include transit fee authority over the Strait of Hormuz, war reparations, and a broader regional ceasefire. The United States has rejected these terms, insisting Iran must first demonstrate willingness to abandon nuclear weapons development before any deal can be struck.

Following the collapse of the Islamabad talks, President Trump announced on April 13 that the US military had begun a blockade of Iranian ports, intercepting vessels that had paid what he called "illegal tolls" to Iran for Strait of Hormuz passage. That announcement drove Brent up 7 percent to $103 on Monday. Details on Monday's price session are available here: Brent Settles at $103 After Hormuz Blockade Order.

Some Tankers Still Transiting the Strait

Despite the US blockade, some vessel traffic continued on Tuesday. A Malawi-flagged, Chinese-owned tanker identified as the Rich Starry passed through the Strait of Hormuz according to MarineTraffic data, illustrating that the blockade is selectively enforced rather than a complete physical closure. The United States stated that its forces "will not impede freedom of navigation for vessels transiting the Strait to and from non-Iranian ports," with the blockade targeting specifically Iranian coastal areas on the Arabian Gulf and Gulf of Oman.

Iran had previously granted selective passage to vessels from China, Russia, India, Pakistan, Malaysia, Thailand, and the Philippines while excluding Western-aligned nations. That patchwork of transit access has left global shipping companies including Maersk and CMA CGM uncertain about viable routing, contributing to the sharp fall in Strait throughput from more than 20 million BPD before the crisis to approximately 3.8 million BPD currently.

WCS and Canadian Producers Watch Closely

For Canadian oil sands producers, Tuesday's price dip offered a reminder that diplomacy remains the key variable in the current market. Western Canada Select traded near $88 per barrel this week at a discount of approximately $16.15 to WTI, still dramatically above the roughly $55 per barrel seen before the conflict began in late February.

Any sustained diplomatic breakthrough that reopened the Strait of Hormuz to normal traffic would likely trigger a significant price correction for both WTI and WCS. Producers including Suncor Energy and Cenovus Energy have been capturing elevated WCS pricing in real time, though their hedging programs and long-term pipeline contracts will partially insulate near-term revenues from short-term fluctuations if prices ease sharply.

Saudi Aramco used the Pakistan-brokered two-week ceasefire that began April 7 to restore its East-West pipeline to full capacity of 7 million BPD and return its Manifa oilfield to full output of 300,000 BPD. Repair work continues at the Khurais field where approximately 300,000 BPD of capacity remains offline. Full recovery details: Saudi Aramco Restores East-West Pipeline to Full Capacity.

IEA, IMF, and World Bank Issue Joint Call for Action

On April 13, the International Energy Agency, the International Monetary Fund, and the World Bank issued a rare joint statement calling for coordinated global action to ease oil price pressures on consumers. The statement highlighted the disproportionate impact of $100-plus crude on emerging markets and developing nations with limited fiscal capacity to absorb sustained energy cost increases.

Separately, the IEA's April 2026 Oil Market Report, also released Tuesday, revised the full-year 2026 global oil demand outlook to a contraction of 80,000 BPD, down from a previous forecast of 730,000 BPD growth, as demand destruction spreads beyond the initial hit to Middle Eastern and Asian refiners. Oil prices partially softened on those findings as well, as markets weighed near-term demand weakness against ongoing supply disruption through the Strait.

Pakistan Races to Arrange Second Round

Pakistan, which has maintained diplomatic relations with both Washington and Tehran throughout the conflict, proposed hosting a second round of negotiations following the breakdown of the Islamabad summit. Pakistani officials have confirmed they are in active contact with both sides to establish an agenda and logistics for new talks, potentially as soon as Thursday.

Analysts at JPMorgan estimate that Brent could drop $15 to $20 per barrel within days of any credible ceasefire framework that restores tanker traffic. For now, the market remains in a high-stakes pause, watching both the diplomatic channel and the physical flow of tankers through the strait. The US blockade took effect Monday: WTI Surged to $105 After US Blockade Announcement.