Key facts
- Oil prices declined as investors assessed a U.S.-Iran deal to reopen the Strait of Hormuz.
- Brent crude futures fell 0.2% to $78.80 a barrel, and WTI crude futures dropped 0.3% to $75.80 a barrel.
- The agreement reportedly includes the U.S. lifting sanctions on Iranian oil and Iran resuming crude exports during a 60-day ceasefire.
- Analysts note that full normalization of shipping through the Strait may take months due to ongoing supply disruptions.
- U.S. crude inventories saw a significant draw of 8.3 million barrels in the week ended June 12.
Oil prices edged lower as investors assessed a U.S.-Iran peace deal that could reopen the Strait of Hormuz, a critical chokepoint for global crude supply. Brent crude futures dipped 0.2% to $78.80 a barrel, and U.S. West Texas Intermediate fell 0.3% to $75.80 a barrel.
Markets are broadly stripping out the embedded geopolitical risk premium in oil prices, according to Priyanka Sachdeva, senior market analyst at Phillip Nova. However, the path toward normalization remains complex, with physical tanker traffic through the Strait yet to fully recover. The deal reportedly includes the U.S. lifting its blockade of Iran's ports, while Tehran would allow oil tanker traffic through the Strait, which has been effectively blocked since late February.
Details of the interim peace deal, which extends a 60-day ceasefire, suggest the U.S. will waive sanctions on Iranian oil, potentially adding millions of barrels to global supply. President Donald Trump stated the deal would rule out a nuclear weapon for Tehran, and a U.S. official indicated Iran could sell oil upon signing. However, industry officials caution that a full return to pre-war production and refining levels could take weeks, months, or even years.
Uncertainty persists as Israel has distanced itself from the pact, and drone strikes in southern Lebanon have fueled concerns about the ceasefire holding. China's crude oil throughput fell 9.1% in May, its lowest in nearly four years, signaling refiners are drawing on stockpiles. U.S. crude stocks fell 8.3 million barrels in the week ended June 12, exceeding expectations.