Key facts
- Brent crude futures settled at $87.33 a barrel, down 3.37%, their lowest since early March.
- U.S. West Texas Intermediate (WTI) crude finished at $84.88, down 3.23%, its lowest since April 17.
- Confidence grew in an imminent peace agreement between the U.S. and Iran, easing escalation fears.
- A memorandum of understanding between the U.S. and Iran to halt the war in the Gulf could be signed soon.
- Iran announced a complete closure of the Strait of Hormuz, saying it would fire on any ship trying to pass through.
Brent crude prices fell to their lowest levels since early March, settling at $87.33 a barrel, as traders grew more confident about an imminent peace agreement between the U.S. and Iran. U.S. West Texas Intermediate (WTI) crude finished at $84.88, its lowest level since April 17. The market sentiment was influenced by reports of a potential memorandum of understanding between the two nations to halt the war in the Gulf. Iranian Foreign Minister Abbas Araqchi stated that the memorandum had not yet been signed and could still change, while U.S. President Donald Trump had called off threatened air strikes against Iran. Final negotiations were reported to focus on nuclear and economic issues, excluding Iran's missile program. The potential reopening of the Strait of Hormuz, a critical shipping route for a fifth of global oil and LNG shipments, contributed to the price decline by reducing the geopolitical risk premium. However, analysts noted that global and regional oil stocks remain low, and it would take time to ensure uninterrupted oil flows even with a deal. ING analysts suggested that oil markets could reach an inflection point in late July if oil flows do not resume, potentially pushing prices significantly higher. OPEC lowered its forecast for 2026 world oil demand growth but raised its forecast for 2027. Goldman Sachs also lowered its 2027 average Brent forecast.