U.S. oil prices fall more than 6% as White House considers further talks with Iran

Oil prices fell Tuesday, after the White House signalled that a second round of peace talks between the U.S. and Iran could take place.

U.S. crude oil futures for May delivery were down nearly 7% to $92.34 per barrel as of 12:17 p.m. ET. International benchmark Brent for June delivery was down 4% at $95.34 per barrel.

The Trump administration is considering further talks with Iran though nothing has been scheduled, a White House official told CNBC on Tuesday. Vice President JD Vance said Monday that the ball was in Iran's court after talks in Islamabad, Pakistan failed last weekend.

"Whether we have further conversations, whether we ultimately get to a deal, I really think the ball is in the Iranian court, because we put a lot on the table," Vance said in a Fox News interview.

The U.S. Navy commenced a "blockade" of Iranian ports in the Persian Gulf on Monday in an effort to wring concessions ouf of Tehran.

The blockade "directly endangers" Iran's oil exports through the Strait of Hormuz, which tracked at around 1.7 million barrels per day last month, according to Commonwealth Bank of Australia's Vivek Dhar. 

"Therefore, the blockade tightens physical oil and refined product markets even further," he said.

Oil demand to fall

The International Energy Agency forecast Tuesday that the oil supply shock triggered by the Iran war will depress demand this year as consumers respond to surging fuel prices.

It expects oil demand to contract by 1.5 million barrels per day in the second quarter, the biggest drop since the Covid-19 pandemic. Demand is expected to fall by 80,000 bpd for the year, a big swing compared to previous IEA expectations that consumption would grow by 640,000 bpd.

U.S. oil prices year-to-date