Oil prices have remained near a three-month low, continuing a four-day streak of losses amid market speculation of a potential increase in global supply. This development follows a U.S.–Iran agreement aimed at reopening the Strait of Hormuz, a vital passage for energy shipments. West Texas Intermediate crude fell below $77 per barrel, while Brent crude lingered near $79, as both benchmarks faced pressure from the possibility of Iranian oil returning to the global market under a preliminary agreement.
The current downturn represents the most prolonged decline in crude prices this year. Market sentiment has been dampened by the expectation that this deal could reduce geopolitical tensions in the Middle East and restore the flow of oil through the Strait of Hormuz. However, analysts have cautioned that the recovery in shipping activity might be gradual due to necessary security measures and logistical challenges that still need to be addressed in the region.
The draft agreement includes a 60-day negotiation phase, allowing Iran to resume oil exports with fewer restrictions. In exchange, the United States would lift specific sanctions and remove obstacles to maritime traffic through the strategic corridor. Despite the anticipated increase in supply, recent weeks have seen signs of tightening global inventories, with industry estimates indicating significant draws in U.S. crude stockpiles, adding complexity to the pricing dynamics.
While the market anticipates increased supply, participants are closely watching to see if the agreement will be upheld and how swiftly physical oil flows can return to normal. Futures pricing currently reflects this mix of short-term supply optimism and ongoing uncertainty regarding the deal’s implementation. Long-term forecasts are increasingly accounting for higher Iranian oil output, underscoring the importance of the agreement’s execution and its impact on global oil markets.