Energy prices fall on hopes for US-Iran talks to continue

Energy prices fell on Tuesday as hopes for continued US-Iran talks eased fears of a prolonged supply shock, although the International Energy Agency warned that the war-driven spike in fuel costs is already starting to weaken oil demand.

Brent crude, the international benchmark, was down 4% at around $95.3 per barrel as of 1612GMT, while US benchmark West Texas Intermediate fell 6.8% to $92.35.

European natural gas prices also dropped 7.7%, with the TTF futures dropping to around €42.8 ($50.45) per megawatt-hour as markets priced in a lower risk of deeper supply disruptions.

The decline came after US President Donald Trump said on Tuesday that they could restart in Pakistan within the next two days.

"You should stay there, really, because something could be happening over the next two days, and we're more inclined to go there," Trump said during a telephone interview with a New York Post reporter who is in Islamabad. "It's more likely, you know why? Because the field marshal is doing a great job."

Vice President JD Vance also said talks with Iran in Pakistan had made “a lot of progress,” boosting expectations that diplomacy may continue despite the lack of a final agreement.

Vance also said the US expects Iran to keep making progress toward reopening the Strait of Hormuz, warning that failure to do so would fundamentally change the course of negotiations.

The Strait of Hormuz remains at the center of market concerns because any prolonged disruption there threatens to tighten global oil and gas supplies and raise fuel costs worldwide.

The US and Iran held direct talks in Islamabad over the weekend, but the negotiations ended without an agreement. The talks followed a two-week ceasefire announced earlier this month.