Oil Prices Edge Higher as Markets Await U.S.-Iran Strait of Hormuz Agreement

At 20:08 ET (00:08 GMT), Brent Oil Futures for August delivery were up 0.7% at $83.71 a barrel, while U.S. West Texas Intermediate (WTI) crude futures for July delivery gained 0.9% to $81.44 a barrel.

Oil Rebounds After Sharp Selloff on Gulf Conflict Easing

Both Brent and WTI had fallen nearly 5% on Monday after U.S. President Donald Trump announced a memorandum of understanding with Iran. The agreement is intended to end months of conflict and restore shipping through the Strait of Hormuz, a key route for global energy flows.

The selloff removed much of the geopolitical risk premium that had built up during the Gulf conflict, pushing both benchmarks to their lowest settlement levels since March. Market participants are now focused on how quickly the agreement can be implemented and the pace at which oil exports and maritime traffic through the Strait can return to normal.

U.S. and Iranian officials are scheduled to attend a formal signing ceremony for the agreement in Geneva on Friday, a key milestone for the anticipated reopening of the waterway.

Market Uncertainty and Demand Outlook Weigh on Sentiment

Analysts cited ongoing uncertainty despite the broadly positive reaction to the planned deal. While the agreement has raised expectations that disrupted energy flows will resume, there are still questions around maritime security conditions, insurance costs for vessels, and how rapidly stranded ships can be brought back into service.

Several institutions have cautioned that rebuilding inventories and normalizing shipping routes could require weeks or even months. Inventories have been drawn down significantly during the closure of the Strait of Hormuz, leaving the market potentially vulnerable if there are setbacks in negotiations or delays in reopening, which could revive supply concerns and price volatility.

Adding to the bearish tone, OPEC last week cut its forecast for global oil demand growth in 2026 for the second consecutive month. The producer group now projects demand to grow by about 970,000 barrels per day next year, down from a previous estimate of 1.17 million barrels per day, reflecting weaker consumption prospects and contributing to pressure on prices.

FAQ

Why did oil prices fall nearly 5% on Monday?
They fell after U.S. President Donald Trump announced a memorandum of understanding with Iran aimed at ending months of conflict and restoring shipping through the Strait of Hormuz, which led to a sharp unwinding of the geopolitical risk premium.

What are current Brent and WTI price levels?
As of 20:08 ET (00:08 GMT) on Tuesday, Brent Oil Futures for August were at $83.71 a barrel, up 0.7%, and WTI crude futures for July were at $81.44 a barrel, up 0.9%.

When will the U.S.-Iran agreement be formally signed?
U.S. and Iranian officials are expected to attend a formal signing ceremony in Geneva on Friday.

How has OPEC adjusted its oil demand outlook?
OPEC has lowered its forecast for global oil demand growth in 2026 to about 970,000 barrels per day, down from a previous forecast of 1.17 million barrels per day, marking its second consecutive monthly downgrade.