Oil prices declined sharply on Tuesday as hopes of renewed talks between the US and Iran eased concerns over prolonged supply disruptions, even as underlying risks to global energy flows remained elevated. Brent crude futures fell $3.93, or 3.96%, to $95.43 a barrel, while US West Texas Intermediate (WTI) crude dropped $6.60, or 6.66%, to $92.48, Reuters reported.The decline follows a strong rally in the previous session, when Brent rose more than 4% and WTI nearly 3% after the US military began a blockade of Iranian ports.“There seems to be this hope in the market there is going to be a better outcome,” said John Kilduff, partner with Again Capital. “All of this means the market had earlier priced in a lot of the disruption we’ve already seen.”Market sentiment has been supported by expectations that negotiating teams from the US and Iran could return to Islamabad this week to resume talks, with continued diplomatic engagement also flagged by US officials and Pakistan’s leadership.However, analysts cautioned that the recent drop in prices does not fully reflect the scale of supply disruptions already underway.“While talk of a resumption in US-Iran talks applied downward pressure on prices, the move lower ignores the loss of physical barrels of oil that are not moving,” said Tamas Varga of PVM Oil Associates.The International Energy Agency (IEA) said attacks on energy infrastructure in the Middle East and Iran’s effective closure of the Strait of Hormuz have led to the largest oil supply disruption in history, with 10.1 million barrels per day lost in March.“Resuming flows through the Strait of Hormuz remains the single most important variable in easing the pressure on energy supplies, prices and the global economy,” the IEA said.The US military said its blockade of the Strait of Hormuz would extend east to the Gulf of Oman and the Arabian Sea, with ship-tracking data showing mixed movements as some vessels turned back while others were allowed passage.In response, Iran warned it could target ports in countries bordering the Gulf, raising the risk of further escalation.“In case talks between the adversaries fail to bear fruit, even revisiting the March highs cannot be ruled out as the decline in global oil inventories might spill into the third quarter and beyond,” Varga said.The IEA also revised its outlook, projecting global oil demand to fall by 80,000 barrels per day in 2026 and supply to decline by 1.5 million barrels per day.Separately, planned Russian oil product exports from the Black Sea port of Tuapse for April have been revised higher by about 60% to 1.27 million metric tonnes from 0.794 million tonnes earlier, according to traders and Reuters calculations.