Oil prices moved lower on Tuesday after the International Energy Agency warned that “demand destruction will spread” as ongoing disruptions and elevated prices begin to weigh on global consumption. The agency highlighted that the current Middle East conflict has already triggered one of the most significant supply shocks in history, contributing to sharp price increases in recent months.
U.S. crude futures fell by more than 3% to around $95 per barrel, while Brent crude also declined. The IEA now expects global oil demand to contract this year, marking the sharpest drop since the COVID-19 pandemic, as high energy costs and limited supply reduce fuel usage across major economies.
Investor sentiment was also affected by renewed hopes for diplomatic talks between Washington and Tehran, which could ease geopolitical tensions. U.S. Vice President JD Vance stated that the next steps in the negotiations depend on the opposing side, adding that an agreement remains possible if key conditions are met.
Meanwhile, the United States has introduced new restrictions on shipping activity in the Persian Gulf, targeting vessels connected to regional oil exports. Analysts warn that these measures could further tighten global supply, particularly through the strategically important Strait of Hormuz, increasing volatility in already strained energy markets.
