Oil Price Movement
On Wednesday, Brent crude futures for August delivery edged up to $79 a barrel and U.S. West Texas Intermediate (WTI) for July delivery rose 0.3% to $76.23 a barrel, halting a multi‑day plunge that had pushed Brent below $80 for the first time since early March. The price rebound followed President Donald Trump’s remarks at a G7 summit in France that the United States could resume bombing Iran if he was dissatisfied with the pending memorandum of understanding (MoU) between Washington and Tehran. Analysts such as Danni Hewson of AJ Bell noted that Trump’s comments turned Brent back over $80, but market participants remain wary of further volatility.
U.S. Crude Inventory Data
The U.S. Energy Information Administration reported that total crude oil inventories—including commercial stocks and the Strategic Petroleum Reserve (SPR)—declined by 17.2 million barrels in the week ending 12 June, reaching 758.5 million barrels, the lowest level since March 1985. Excluding the SPR, inventories fell by 8.3 million barrels, well below analysts’ expectation of a 3.6 million‑barrel draw. At the Cushing, Oklahoma delivery hub, crude stocks dropped by 1.6 million barrels to 20 million barrels, the smallest stockpile since September 2014. The steep draw reflects rapid consumption of U.S. crude reserves since the start of the Middle‑East conflict, aimed at offsetting price spikes and compensating for the supply disruption caused by the closure of the Strait of Hormuz.
Federal Reserve Outlook
The Federal Open Market Committee is widely anticipated to leave the federal funds rate unchanged in the range of 3.50% to 3.75% at its Wednesday meeting, marking the first policy decision under new chair Kevin Warsh. The recent decline in oil prices provides the Fed with additional flexibility to maintain a steady‑rate stance, reducing inflationary pressure from higher energy costs. Although President Trump has repeatedly called for lower rates, the strong U.S. labor market and earlier oil‑driven inflationary shocks limit the scope for easing. The Fed will also release updated economic projections alongside its rate decision.
Geopolitical Context and Outlook
The oil market’s recent slide is tied to growing optimism that a final U.S.–Iran peace deal will be signed on Friday, potentially removing the geopolitical premium that had lifted prices since the conflict escalated at the end of February. However, Trump’s statements that the United States could resume attacks on Iran if the agreement does not meet his expectations re‑introduced uncertainty, causing short‑term price swings. The International Energy Agency projected that the oil market could shift into a significant surplus next year as the Strait of Hormuz reopens and global supply normalises.