Oil Prices Slip 1% After US‑Iran Deal

Overview

Oil prices declined in Asian trading on Thursday following the announcement of an interim U.S.–Iran peace agreement and amid concerns of a looming global supply surplus.

Price Movements

At 20:44 ET (00:44 GMT), Brent crude futures for August delivery fell 1 percent to $78.73 per barrel, while West Texas Intermediate (WTI) crude for the same month slipped 1.2 percent to $75.89 per barrel. The previous day prices had risen nearly 1 percent after President Donald Trump indicated the agreement was not yet final and warned of possible military action.

Details of the U.S.–Iran Accord

The interim agreement, signed digitally by President Trump and Iranian President Masoud Pezeshkian, spans 60 days and provides for a cessation of hostilities, the reopening of the Strait of Hormuz, and a gradual easing of U.S. restrictions on Iranian oil exports. Trump emphasized that Washington could re‑impose pressure if Tehran violates the terms.

Supply Outlook

Analysts noted that the prospect of Iranian barrels re‑entering the market reinforces expectations of improving global supplies after recent Gulf disruptions. The International Energy Agency (IEA) warned that oil markets could shift into a substantial surplus once Middle Eastern production fully recovers. The IEA forecast global oil supply growth of about 8 million barrels per day between 2026 and 2027, far exceeding the expected demand growth of roughly 2 million barrels per day, which would generate a surplus of more than 5 million barrels per day by 2027.

U.S. Inventory Data

The U.S. Energy Information Administration (EIA) reported that commercial crude inventories fell by 8.3 million barrels in the week ended 12 June, bringing total crude stocks to 418.2 million barrels, a decline far steeper than analysts’ expectation of a 3.6 million‑barrel draw. Gasoline inventories decreased by 0.9 million barrels to 214.2 million barrels, while distillate stocks unexpectedly rose by about 1.0 million barrels to 103.1 million barrels.

Monetary Policy Context

The market also incorporated the Federal Reserve’s decision on Wednesday to leave the policy rate unchanged, while signalling a potential rate hike later in the year.

Implications

The combination of the interim diplomatic development, the IEA’s surplus projection, and the stronger‑than‑expected draw in U.S. crude inventories contributed to the downward pressure on oil prices despite the Fed’s unchanged stance.