Oil prices settled lower on Tuesday after U.S. Vice President JD Vance said Washington and Tehran had made progress in negotiations, easing some fears of an immediate escalation in the Iran conflict. “We think that we’ve made a lot of progress. We think the Iranians want to make a deal,” Vance told reporters during a White House briefing.
Brent crude futures for July delivery settled down 82 cents, or 0.73%, at $111.28 per barrel. U.S. West Texas Intermediate crude for June delivery, which expired on Tuesday, fell 89 cents, or 0.82%, to settle at $107.77. The more-active July WTI contract declined 23 cents to $104.15.
Markets remained highly sensitive to developments surrounding the Iran conflict and the continued disruption of energy flows through the Strait of Hormuz, which normally carries roughly one-fifth of global oil and liquefied natural gas supplies.
On Monday, President Donald Trump said he was postponing a military strike that had reportedly been planned for Tuesday while negotiations continued, though he warned the United States remained prepared to resume military action if talks fail.
“We continue to have significant amounts of oil offline and with regional infrastructure in the crosshairs, the market is essentially waiting for either a deal or another round of military escalation,” said John Kilduff of Again Capital.
Iranian state media reported that Tehran’s latest proposal to Washington includes ending hostilities across the region, including in Lebanon, reducing the U.S. military presence near Iran, and securing compensation for damage caused during the war.
At the same time, the United States imposed additional sanctions on an Iranian foreign exchange network and blocked 19 vessels accused of transporting Iranian petroleum and petrochemical products.
Global supply concerns also remained elevated as Chinese state refiners reportedly reduced crude processing by more than 1 million barrels per day since the outbreak of the war, reflecting both disrupted supply flows and weakening refining margins.
According to consultancy Energy Aspects, Chinese state refiners processed around 8.4 million barrels per day this month, down from 9.5 million barrels per day in March and well below pre-war levels near 10 million barrels per day.
Meanwhile, Russia’s Ryazan refinery, which accounts for nearly 5% of the country’s refining capacity, halted operations following a Ukrainian drone attack last week, adding to broader concerns about global refining disruptions.
In the United States, government data showed a record 9.9 million barrels were withdrawn from the Strategic Petroleum Reserve last week, reducing inventories to roughly 374 million barrels, the lowest level since July 2024.