Market Movement
On 12 June 2026, Brent crude futures expiring in August slipped 3.7% to $87.00 a barrel at 15:10 ET (19:10 GMT), while U.S. West Texas Intermediate (WTI) futures expiring in July fell 3.6% to $84.54 a barrel. Both benchmarks were on track for weekly declines exceeding 6%.
Political Developments Influencing Prices
President Donald Trump announced on Thursday that a U.S.–Iran agreement could be signed soon, possibly over the weekend, and that the deal would unblock the Strait of Hormuz, end the U.S. naval blockade of Iranian ports, and ensure Iran would never acquire a nuclear weapon. The statement sent Brent below $90 a barrel for the first time since early March.
Later that morning, Trump criticized Iran’s rhetoric, claiming the memorandum of understanding (MoU) being discussed did not match the written terms and that there was “no such thing as dealing in good faith” with Iran. Iran’s foreign minister Seyed Abbas Araghchi responded that the MoU had “never been closer,” while Pakistan’s Prime Minister Shehbaz Sharif, acting as chief mediator, said a final text had been reached and Pakistan was working closely with both sides to finalize next steps.
Historical Context and Inflationary Impact
The price retreat brought Brent back to levels last seen in early March, shortly after the start of the U.S.–Israeli joint assault on Iran at the end of February. Despite the decline, Brent remains above the pre‑war level of roughly $70 a barrel. The earlier surge in oil prices contributed to an inflationary shock, prompting the European Central Bank to cite an Iran‑linked oil spike as a central factor in its recent interest‑rate hike.
Market Commentary
Macquarie global energy strategist Vikas Dwivedi noted that the market has sold off about $11 per barrel since 22 May, driven by optimism about a U.S.–Iran deal reopening the Strait of Hormuz. He said the floor should hold as long as the Strait remains effectively closed and suggested short‑term upside outweighs downside, recommending trading within a $10 (possibly $6) range rather than detailed models.
OPEC Outlook vs. Other Forecasters
On Thursday, the Organization of the Petroleum Exporting Countries (OPEC) revised its demand outlook, now expecting world oil demand in 2026 to grow by 1 million barrels per day (bpd) versus a year earlier, down from its earlier estimate of 1.2 million bpd. For 2027, OPEC raised its forecast to 1.7 million bpd, up from 1.5 million bpd. These projections are more optimistic than those of the U.S. Energy Information Administration (EIA), which sees demand falling by 1.1 million bpd in 2026, and the International Energy Agency (IEA), which expects a contraction of 420,000 bpd.
OPEC added that global economic performance remains resilient, keeping its GDP growth forecasts for 2026 and 2027 unchanged, while flagging geopolitical events and U.S. tariff‑related developments as key issues to monitor in the second half of 2026.
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