While the Dow Jones Industrial Average (INDEX: ^DJI) trades lower today, oil prices have also felt some pressure and forced the ProShares Ultra Oil & Gas (NYSE: DIG) fund to fall around 2%. With nonfarm payrolls increasing only 120,000 -- half of last month's 240,000 increase -- fears of another economic slowdown and less demand for energy pushed oil lower, while the prospect of easing tensions with Iran decreased the threat of a supply shock. Let's take a closer look at the news stories that are impacting oil prices today.

Potential fears
With last year's sell-off of the Dow, oil prices fell on weaker demand:

Brent Crude Oil Spot Price Chart

Brent Crude Oil Spot Price data by YCharts

Now, just as the Dow was pushing 52-week highs, the unexpectedly low new payroll numbers sparked sell-off in both stocks and oil. In addition to the poor jobs numbers, as well as the Federal Reserve's meeting minutes reducing expectations of further quantitative easing, there was data from China that also made future growth look bleak.

China, the world's second-largest consumer of oil, recently reported a performance of manufacturing index score of 53.1 for March, while HSBC calculated its PMI at 48.3. Any figure less than 50 can signal a contraction in manufacturing, and HSBC's survey could indicate a much larger slowdown in China. And if you combine China's shaky PMI figures, slower first-quarter GDP growth forecasts, and an uptick in inflation to 3.6%? An economic slowdown for the second-largest oil consumer might lead to less-than-expected demand for energy.

Potential calm
With Iran threatening to hamper trade through the Strait of Hormuz -- through which 20% of the world's oil travels -- oil prices react to any Iran-related news. Currently, the controversial issue of Iran's uranium enrichment is of utmost importance to oil markets, and this will be the key focus of talks that begin Friday in Istanbul between Iran and the U.N. Security Council (plus Germany). The outcome of these talks could have a major impact on oil prices, considering Iran is the the world's fourth-largest producer of oil.

In the future
Should lower oil prices prevail, energy behemoths like ExxonMobil and Chevron -- both of which are down today -- would see a reversal in fortunes from their high net profit margins. And if tensions ease with Iran and sanctions are lifted, Royal Dutch Shell may be able to pay off its bills owed to Iran that sanctions have made difficult to pay.

However, if the talks with Iran don't produce a rosy outcome, and new economic data points to a recovery, look for a reversal of today's drop. While energy markets respond to all types of breaking news, investors with a long-term focus can avoid the headaches of daily swings. To help build your portfolio without fretting about the news of Middle East tensions, read our free report: "3 Stocks That Will Help You Retire Rich."