An aerial view of Marathon Petroleum Corp’s Los Angeles Refinery is seen on April 2, 2026 in Carson, California.
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Oil prices fell on Tuesday as traders assessed the risk of immediate supply disruptions amid renewed tensions between the US and Iran.
An international benchmark Brent Crude futures were down 1.6% at $112.67 a barrel at 6:00 a.m. ET, while the U.S. West Texas Intermediate futures fell 2.2% to trade at $104.05. Brent and WTI gained 6% and 4% more, respectively, on Monday.
The fragile ceasefire between the US and Iran appeared to be unraveling after Iranian drones and missiles attacked the United Arab Emirates, and Washington said it had sunk Iranian ships in the vital Strait of Hormuz.
Speaking to Fox News on Monday, US President Donald Trump warned that Iran would be “blasted off the face of the earth” if it targeted US ships protecting commercial traffic in the crisis.
Iran’s Foreign Minister Abbas Araghchi said on social media that the latest incidents in the Strait of Hormuz “make it clear that there is no military solution to the political crisis.”
He added: “As the talks progress with Pakistan’s benevolent effort, the US should be wary of being dragged back into the mess by unwise people. So should the UAE.”
Strategists at Dutch bank ING say the latest attacks in the Persian Gulf show the first signs of a US-Iran rift.
“Markets could get some relief today following President Trump’s overnight comments suggesting the conflict could continue for another two to three weeks,” ING’s Warren Patterson and Ewa Manthey said in a research note.
“However, markets are likely to view it with great skepticism, given the recent escalation and repeated extensions of the ceasefire periods since the conflict began,” they added.
Brent crude
Iraq, an OPEC producer, is reported to have offered its buyers strong discounts for crude loading this month, according to Bloomberg, although tankers will have to be willing to go through the Strait of Hormuz to pick up barrels. CNBC has contacted Iraq’s oil ministry and is awaiting a response.
‘It’s not just a question of value’
Global oil inventories have not yet reached their lowest levels, but the pace of decline and uneven distribution across regions are raising concerns about a lack of space, Goldman Sachs wrote in a paper on Monday.
The bank said buffers of readily available refined products are rapidly depleting, particularly in petrochemical feedstocks such as naphtha and LPG, as well as jet fuel.
Chevron CEO Mike Wirth warned Monday that fuel shortages are a growing problem in other regions of the world as the road remains closed.
“I think as people look at the realities of solid materials, it’s not just a question of price,” Wirth told CNBC’s David Faber at the Milken Institute Global conference. “Actually – can we get fuel? I think within the next couple of weeks, we’re going to see those effects start to flow throughout the system.”
The total global oil supply, including crude and refined products stored on land and at sea, is estimated at about 101 days of current demand and could drop to 98 days by the end of May, Goldman said. While that remains above emergency limits, the combined figures cover acute shortages in certain regions and products, particularly where export restrictions limit supply flows.
“Our estimates of the supply of refined products and crude stocks in countries point to a high risk of product shortages in South Africa, India, Thailand and Taiwan,” said the bank’s analysts.
– CNBC’s Spencer Kimball Emma Graham contributed to this report.
