Oil Prices Steady as U.S.-Iran Tensions Escalate, Talks in Doubt

Oil prices were little changed Tuesday amid uncertainty over the fate of the second round of peace talks between the U.S. and Iran. West Texas Intermediate futures for May delivery lost 0.32% to $89.32 per barrel as of 7:59 a.m. ET, while international benchmark Brent crude futures for June delivery slid 0.13% to $95.36 per barrel. WTI and Brent had settled 7% and 5% higher on Monday.

Reports suggest that Vice President JD Vance would lead the U.S. delegation to Pakistan, while Iran's rhetoric so far indicates it is not ready for further negotiations. "We do not accept negotiations under the shadow of threats, and in the past two weeks, we have prepared to reveal new cards on the battlefield," Mohammad Bagher Ghalibaf, Iran's parliamentary speaker, said Tuesday in a post on X.

U.S. President Donald Trump, meanwhile, has renewed threats of overwhelming military action against Iran, warning that "lots of bombs [will] start going off" if no agreement was reached before a fragile ceasefire expires Tuesday evening. Trump has reverted to more aggressive rhetoric in recent days, oscillating between escalation and references to negotiations, with tensions spiraling after U.S. forces seized an Iranian ship on Sunday as Trump sticks with his blockade of Iranian ports.

Rystad Energy said in a note on Tuesday that the Hormuz disruption has already driven a major upgrade to its 2026 oil price outlook, and warned that if oil prices push through to and sustain $100, it could unlock as much as 2.1 million barrels a day of new supply from South America. "South America is now positioned as the world's most consequential source of incremental supply," said Radhika Bansal, senior vice president at Rystad Energy. "The Middle East conflict has done more than spike oil prices — it has exposed how dangerously concentrated global supply chains are around the Strait of Hormuz," she added.