Crude oil prices crashed on Tuesday as markets assessed fresh data pointing to demand destruction in China, the world’s largest crude importer.
Brent crude futures plunged another 5% in trade to $89.57 per barrel, marking the lowest level in seven weeks, while WTI crude futures also declined nearly 6% to an intraday low of $86 per barrel, the weakest level since 17 April, when Iran briefly stated that the vital Strait of Hormuz shipping route was fully open.
China’s crude imports dropped to around 7.8 million barrels per day last month, marking the lowest level in more than eight years and nearly 4 million barrels per day below the 2025 average.
Weaker demand from the world’s largest oil importer, combined with record US exports and emergency reserve releases, caused crude oil prices to surrender most of their recent gains. In addition, both factors have provided much-needed relief to global oil supplies that were strained by the war involving Iran.
While oil prices are still trading well above pre-war levels, they remain significantly below the peaks seen in recent months, when the effective closure of the Strait of Hormuz severely disrupted global energy flows.
Easing Middle East tensions put pressure on oil prices
The easing of tensions in the Middle East following a brief escalation also put pressure on oil prices. US President Donald Trump again stated that a peace deal with Iran could be close, reigniting hopes that the blockade in the Strait of Hormuz may eventually be lifted.
Iran’s military reportedly said on Monday that it would halt offensive operations following an appeal from Trump. However, it warned that harsher attacks could follow if Israel resumed strikes on Lebanon.
Regional tensions had escalated on Monday after Israel and Iran exchanged fire in their first direct attacks since the US brokered a ceasefire with Tehran two months ago.
Trump on Tuesday (local time) said that a US-Iran peace deal is in its “final throes.” Iran has also confirmed that it has not abandoned peace negotiations.
However, this is not the first time such claims have emerged. Since the US declared a ceasefire with Iran on 7 April, Trump has publicly stated multiple times that a peace and nuclear agreement with Tehran was close or nearing completion. So far, none of those predictions has materialised.
Highlighting the fragile nature of the recent pullback in tensions, Iranian President Masoud Pezeshkian said in a post that Iran had neither abandoned the battlefield nor the negotiating table.
Even if a US-Iran peace agreement is reached, several hurdles could delay the full resumption of normal oil flows. These include the removal of mines in the Strait of Hormuz, the time required to restart shut-in oil fields, and repairs to damaged energy infrastructure hit by drone and missile strikes.
(With inputs from Bloomberg)
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