Ceasefire announced, strait still closed: Oil markets on edge ahead of US-Iran talks

Oil futures settled lower on Friday, April 10, 2026, and recorded their steepest weekly loss since 2022, as investors weighed a fragile two-week ceasefire between the United States and Iran against continued restrictions on shipping through the Strait of Hormuz and ongoing damage to Saudi Arabian energy infrastructure across the Gulf.

Brent crude futures for June delivery settled down 72 cents, or 0.8 percent, at $95.20 a barrel. Over the course of the week, Brent contracts fell 12.7 percent, the benchmark’s worst weekly performance since August 2022. United States West Texas Intermediate crude futures for May delivery declined $1.30, or 1.3 percent, to settle at $96.57 a barrel. The WTI weekly decline of 13.4 percent was the largest since April 2020, during the height of pandemic-era lockdowns.

The weekly selloff was driven primarily by the announcement on Tuesday, April 8, of a two-week ceasefire between the United States and Iran, brokered by Pakistan. The ceasefire triggered the largest single-session percentage decline in WTI crude since April 2020, with futures falling more than 16 percent in a single day. Brent lost approximately 13 percent in the same session. Despite the sharp fall, crude benchmarks remained well above their pre-conflict levels of approximately $70 per barrel before United States and Israeli forces initiated coordinated airstrikes against Iran on February 28 under Operation Epic Fury.

What triggered the largest weekly oil price drop since 2022 in the week of April 7 to April 10, 2026?

The Strait of Hormuz, a narrow waterway between Iran and Oman approximately 34 kilometres wide at its narrowest point, handles roughly 20 percent of global seaborne oil trade. Before the conflict began on February 28, the strait served as the primary export corridor for crude oil, liquefied natural gas, and refined fuel from Saudi Arabia, the United Arab Emirates, Iraq, Kuwait, and Qatar. The de facto closure of the strait following the United States and Israel striking Iran triggered what analysts and multilateral institutions have described as the largest disruption of crude oil supply in the history of global energy markets, exceeding in magnitude the oil shocks following the Yom Kippur War in 1973, the Iranian Revolution in 1979, and the Persian Gulf War in 1990.

The ceasefire agreement was announced by United States President Donald Trump on the evening of Tuesday, April 8, less than two hours before a deadline he had imposed for Iran to comply with demands to reopen the Strait of Hormuz. Trump announced the agreement on social media, stating that the United States had received a 10-point proposal from Iran that formed a workable basis for negotiations. The ceasefire was made contingent on Iran allowing complete, immediate, and safe reopening of the strait to commercial shipping.

Why has the Strait of Hormuz remained closed to commercial shipping after the US-Iran ceasefire of April 8, 2026?

Despite the ceasefire announcement, the Strait of Hormuz remained largely closed to commercial shipping as of Friday, April 10. Iran was reported to be vetting individual vessels seeking to transit the waterway and imposing transit fees that shipping industry sources described as reaching over one million dollars per vessel. Tehran officials told Reuters that Iran intends to charge fees for ships passing through the strait under any peace arrangement. Reports in the Financial Times indicated that Iran planned to demand payment of such fees in cryptocurrency.

Western governments and the United Nations shipping agency pushed back against the toll proposal. Trump warned Iran explicitly on Friday to cease the toll-charging practice, posting on Truth Social that Iran appeared to be engaging in short-term extortion using international waterways. Trump separately stated on Friday that oil would flow very quickly through the strait whether or not Iran cooperated. The gap between the ceasefire terms as understood by Washington and the conditions Iran was actively enforcing in the strait represented a central point of contention heading into the Islamabad negotiations.

Formal high-level diplomatic talks between United States and Iranian negotiators were scheduled in Islamabad, Pakistan, for Saturday, April 11. Pakistan, which proposed the ceasefire framework, is itself heavily dependent on imported oil and had sought alternative supply routes via the Red Sea port of Yanbu in Saudi Arabia since early March. The Islamabad talks were expected to address two competing frameworks: a 10-point plan proposed by Iran and a 15-point plan drawn up by the United States. The core issues separating the two parties included Iran’s nuclear programme, management of Iran’s military capabilities and its regional relationships with armed groups, international sanctions, economic compensation for war damage, and the presence of United States forces in the region. Iran separately sought formal recognition of its right to enrich uranium, a position the United States has firmly opposed.

Lebanon separately indicated it intends to participate in a meeting with United States and Israeli representatives in Washington the following week to discuss a ceasefire arrangement.

How did attacks on Saudi Arabia’s energy infrastructure affect global crude oil prices and supply in April 2026?

Prices steadied partially on Friday as fresh damage to Saudi Arabian energy infrastructure reinforced concerns about the physical supply outlook. The Saudi Press Agency, citing a Saudi Ministry of Energy official, reported on Thursday that attacks on Saudi Arabian energy facilities had cut the kingdom’s oil production capacity by approximately 600,000 barrels per day. Separate strikes on the East-West Crude Oil Pipeline, which connects eastern Saudi Arabian oil fields to the Red Sea port of Yanbu, reduced throughput by approximately 700,000 barrels per day. The pipeline had been operating as Saudi Arabia’s primary alternative export route since Iranian attacks made Strait of Hormuz transit economically unviable for most commercial operators. The United Arab Emirates diverted crude oil via the Abu Dhabi Crude Oil Pipeline to the port of Fujairah on the Arabian Sea as an alternative to Hormuz transit.

The Ras Laffan industrial complex in Qatar, which accounts for roughly 20 percent of global liquefied natural gas production, sustained damage that reduced its export capacity by 17 percent, according to estimates from Rystad Energy. Rystad Energy further estimated that the total cost of rebuilding energy infrastructure across the region could exceed $25 billion.

The United States Energy Information Administration reported that Middle Eastern producers had shut in approximately 7.5 million barrels per day of crude oil production in March as storage capacity tightened, with outages projected to rise to 9.1 million barrels per day in April. The International Energy Agency projected that the conflict had reduced global oil supply by approximately 11 million barrels per day as of the end of March. ANZ Bank estimated in an April 9 note that approximately 9 million barrels per day of crude supply had been effectively removed from global markets. An estimated 136 million barrels of crude oil and refined products were reported to be stranded in the Gulf, a backlog that analysts said would take considerable time to clear even after a sustained reopening of the strait.

What do energy analysts and institutions forecast for the global oil market in 2026 following the US-Iran conflict and Strait of Hormuz closure?

Eight analysts polled by Reuters projected that the global oil market would record a demand surplus over supply of approximately 750,000 barrels per day on average across 2026. A similar poll conducted in September 2025 had forecast a surplus of 1.63 million barrels per day for 2026, driven by OPEC+ production increases and strong output growth from the United States, Brazil, and Guyana. Supply disruptions prompted what Reuters described as the largest annual price forecast increase in its polling records, with analysts raising their 2026 Brent crude price forecasts by approximately 30 percent to a median of $82.85 per barrel.

Despite sharp falls in futures market prices from conflict-era peaks, prices in the physical crude market remained at record highs as of the week ending April 10, reflecting the ongoing severity of actual supply disruptions. Middle Eastern producers had asked Asian refiners to submit crude oil loading programmes for April and May in preparation for the eventual resumption of Strait of Hormuz shipping, according to three sources cited by Reuters, indicating logistical preparation even as diplomatic talks remained at an early stage.

The Trump administration was reported to be likely to extend a waiver allowing countries to purchase some sanctioned Russian oil and petroleum products. United States gasoline prices nationally had risen above $4 per gallon, the highest level since late 2023. The United States government reported a sharp spike in consumer price inflation in March, attributed to the largest monthly jump in gasoline prices in six decades, though the increase came in below economists’ expectations.

Key takeaways on what this development means for the countries, institutions, and global context involved

• Brent crude futures settled at $95.20 a barrel on April 10, posting a weekly decline of 12.7 percent, the steepest weekly loss since August 2022, while WTI recorded a weekly fall of 13.4 percent, its largest since April 2020.
• The ceasefire between the United States and Iran, announced on April 8 and contingent on reopening the Strait of Hormuz, produced the largest single-day decline in WTI crude since April 2020, with futures falling more than 16 percent and Brent settling down approximately 13 percent, though benchmarks remained well above pre-conflict levels of around $70 per barrel.
• The Strait of Hormuz remained largely closed to commercial shipping as of April 10 despite the ceasefire, with Iran reported to be vetting vessels and imposing transit fees, while Saudi Arabia’s oil production capacity had been cut by approximately 600,000 barrels per day and its East-West Crude Oil Pipeline throughput reduced by approximately 700,000 barrels per day following attacks on energy facilities.
• The International Energy Agency projected the conflict had removed approximately 11 million barrels per day from global oil supply as of the end of March, while eight analysts polled by Reuters forecast the market to record a demand surplus over supply of approximately 750,000 barrels per day in 2026, reversing pre-war forecasts of a 1.63 million barrels per day surplus.
• Formal United States and Iranian diplomatic talks were scheduled for Saturday, April 11, in Islamabad under Pakistani mediation, centred on two competing frameworks addressing Iran’s nuclear programme, military capabilities, regional armed groups, international sanctions, and economic compensation, with a significant gap remaining between the parties’ positions.