Oil falls nearly 3% as markets weigh US-Iran accord and surplus risks

Oil prices retreat on supply concerns

As of 01:22 ET (05:22 GMT) on Thursday, Brent Oil Futures for August delivery fell 2.13% to $77.70 per barrel, while West Texas Intermediate (WTI) crude futures dropped 2.8% to $74.66 per barrel. Both benchmarks revisited their lowest levels since March 2 after having risen about 1% in the previous session.

Including Thursday’s losses, oil prices have declined in five of the last six sessions and are down nearly 11% so far this week. The recent weakness reflects growing expectations of a more comfortable global supply outlook amid shifting geopolitical dynamics and production forecasts.

Markets are focusing on the newly announced interim accord between the United States and Iran, digitally signed by President Donald Trump and Iranian President Masoud Pezeshkian. The 60-day agreement calls for a cessation of hostilities, reopening of the Strait of Hormuz, and a gradual easing of U.S. restrictions on Iranian oil exports.

Trump stated that Washington could reimpose pressure if Tehran fails to comply with the accord, after previously indicating the deal was not yet final and cautioning that military action could resume if U.S. expectations are not met.

Surplus outlook and inventory data

The prospect of increased Iranian exports comes as the International Energy Agency (IEA) warns that oil markets could move into substantial surplus once Middle Eastern production fully recovers. The IEA projects global oil supply growth of about 8 million barrels per day between 2026 and 2027, compared with expected demand growth of roughly 2 million barrels per day, implying a surplus of more than 5 million barrels per day by 2027.

U.S. inventory data provided some counterbalance to the bearish sentiment. The Energy Information Administration (EIA) reported that commercial crude stockpiles fell by 8.3 million barrels in the week ended June 12 to 418.2 million barrels, a significantly larger draw than analysts’ expectations for a 3.6 million-barrel decline. Gasoline inventories slipped by 0.9 million barrels to 214.2 million barrels, while distillate stockpiles unexpectedly rose by about 1.0 million barrels to 103.1 million barrels.

In parallel, markets are evaluating the Federal Reserve’s latest policy decision. The Fed left interest rates unchanged on Wednesday, as expected, but indicated the possibility of a rate hike later this year, adding another factor for traders to consider in assessing the broader demand outlook for crude.

FAQ

What caused oil prices to fall on Thursday?
Oil prices fell nearly 3% in Asian trade as investors focused on the interim U.S.-Iran accord and the potential return of additional Iranian barrels to the market, reinforcing expectations of improved global supplies.

What are the latest Brent and WTI price levels?
As of 01:22 ET (05:22 GMT), August Brent futures were down 2.13% at $77.70 per barrel, and WTI crude futures were down 2.8% at $74.66 per barrel.

What did the U.S.-Iran agreement include?
The 60-day interim agreement provides for a cessation of hostilities, reopening of the Strait of Hormuz, and a gradual easing of U.S. restrictions on Iranian oil exports, with the United States reserving the option to reimpose pressure if Iran violates the terms.

How did U.S. crude inventories change last week?
According to the EIA, U.S. commercial crude inventories fell by 8.3 million barrels in the week ended June 12 to 418.2 million barrels, a larger draw than the expected 3.6 million-barrel decline.