Oil prices fell over $1 on Tuesday, April 21, 2026, on expectations that peace talks between the United States and Iran will take place this week and lead to more supply to flow from the key Middle East producing region.
Brent crude futures declined $1.04, or 1.1%, at $94.44 a barrel at 0600 GMT, while U.S. West Texas Intermediate (WTI) for May fell $1.66, or 1.9%, to $87.95.
The May contract expires on Tuesday, and the more-active June contract was down $1.24, or 1.4%, at $86.18.
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 that 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.
ING analysts said in a statement: “While energy markets popped higher yesterday following Iran’s decision to reverse its opening of the Strait of Hormuz, they’re still trading in a manner which suggests optimism over U.S.-Iran talks.
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“But we believe markets are underpricing the ongoing supply disruption. Optimism appears to be clouding the reality of the supply shock.”
Iran is weighing participation in 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 Iran rejoining peace efforts, with the current two-week ceasefire set to expire this week.
Shipping activity through the Strait of Hormuz, a 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.
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