Oil prices have been swinging sharply this week as traders weigh two opposing forces: a fully implemented US naval blockade of Iran and growing signals that peace talks could restart soon.
Brent crude dropped 4.6% on Tuesday to trade below $95 a barrel. West Texas Intermediate fell to around $91. Prices partially recovered in Asian trading on Wednesday after US Central Command confirmed the blockade was complete.
Admiral Brad Cooper said US forces have “completely halted economic trade going into and out of Iran by sea.” President Trump followed up on social media, claiming the US had Iran in a “chokehold” and that the country could run out of storage capacity.
First full day of the U.S. naval blockade on Iran:
– Zero vessels left Iranian ports
– Six merchant ships turned back after American warnings
– No shots fired, no enforcement neededMeanwhile, traffic through the Strait of Hormuz continued normally with over 20 vessels passing… https://t.co/6PddzTyrPr pic.twitter.com/GavqZOarmX
— Mario Nawfal (@MarioNawfal) April 14, 2026
The blockade began just two days after ceasefire talks in Pakistan ended without a deal. Washington is now racing to hold a second round of negotiations before the current ceasefire expires next week.
Trump told the New York Post that fresh talks could happen “over the next two days.” He also told Fox Business anchor Maria Bartiromo that he saw the war as “very close to over.”
One proposal is returning to Pakistan for the next round of talks, though other locations are being discussed.
Iran, for its part, is considering pausing shipments through the Strait of Hormuz voluntarily to avoid a direct confrontation with the US naval cordon, according to a person familiar with the matter.
The Strait of Hormuz carries roughly 20% of the world’s oil supply. Since the conflict began in late February, Iran has blocked nearly all shipping through the channel.
ANZ analysts estimated at least 10 million barrels per day of supply has been cut off by the war. They noted that even without a worst-case escalation, tight supply alone is enough to keep Brent prices elevated.
Japan is preparing to release a second round of national oil stockpiles starting in early May. Refiners across the Asia-Pacific region may also be forced to cut operations, reducing supplies of jet fuel and diesel.
The International Energy Agency and OPEC have both cut their oil demand forecasts, citing rising prices squeezing consumers.
Dilin Wu at Pepperstone Group said oil is likely to move sideways with a “softer bias” in the near term as markets absorb the shift toward diplomacy. He added that even if tensions ease, a recovery in physical supply will lag due to logistical bottlenecks near Hormuz.
ANZ said if escalation risks fade, Middle East supply could see a tiered recovery, with 2 to 3 million barrels per day restored in the first four weeks.
Rebecca Babin, senior energy trader at CIBC Private Wealth Group, said markets are “leaning toward a normalization of flows by the end of April.”
The American Petroleum Institute reported US crude inventories rose 6.1 million barrels last week, which would mark the eighth straight weekly build if confirmed by official data Wednesday.
The Trump administration also confirmed it will let a waiver allowing limited purchases of Iranian crude expire this weekend.
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