As of 02:52 ET (06:52 GMT) on Wednesday, Brent Oil Futures for August delivery fell 0.9% to $78.23 per barrel, while West Texas Intermediate (WTI) crude futures declined 1.2% to $75.16 per barrel. Both benchmarks touched their lowest levels since March 2 and have dropped roughly 10% over the last two sessions.<\/p>\n
The sustained decline reflects a rapid shift in market sentiment over the past week. Traders have been unwinding the geopolitical risk premium that had been embedded in prices, amid expectations that key shipping routes could reopen and additional Middle Eastern crude could return to the market.<\/p>\n
The main focus for investors remained the potentially bearish implications of the U.S.-Iran peace deal, expected to be signed on Friday. Under the pact, the United States will end its blockade of Iran's ports, and Tehran will restore maritime traffic through the Strait of Hormuz. The agreement will also rule out a nuclear weapon for Tehran and allow Iran to sell its oil immediately upon signing.<\/p>\n
These measures could facilitate the gradual reopening of the Strait of Hormuz and the return of Iranian crude exports, raising expectations of increased global supply. However, uncertainty over how quickly the agreement can be implemented has limited further price declines. Reports indicate that shipping companies are waiting for clarity on security arrangements and operating conditions, and analysts caution that a full normalization of flows could take longer than markets currently anticipate.<\/p>\n
Losses were partially capped by signs of firm U.S. demand. Industry data from the American Petroleum Institute (API) showed that U.S. crude stockpiles fell by 8.33 million barrels in the week ended June 12, a much larger draw than the estimated 4.5 million barrels. Gasoline inventories rose by 2.48 million barrels, while distillate stocks, including diesel and heating fuel, edged down by 10,000 barrels. The sizeable crude draw pointed to resilient demand and tighter near-term supplies in the world's largest oil consumer.<\/p>\n
Investors are now awaiting official U.S. government inventory data due later on Wednesday to confirm the reported stockpile draw and provide further direction for prices.<\/p>\n
Why are oil prices falling despite strong U.S. crude demand?<\/strong> What is the significance of the U.S.-Iran peace deal for oil markets?<\/strong> How much did U.S. crude inventories change according to the API?<\/strong> What are traders watching next?<\/strong>
Oil prices are declining mainly due to expectations that a U.S.-Iran peace agreement will lead to higher global supply, which outweighs the supportive impact of a sharp drawdown in U.S. crude inventories.<\/p>\n
The deal is expected to end the U.S. blockade of Iran's ports and restore maritime traffic through the Strait of Hormuz, allowing Iran to sell its oil immediately and potentially adding more Middle Eastern crude to global markets.<\/p>\n
The American Petroleum Institute reported that U.S. crude stockpiles fell by 8.33 million barrels in the week ended June 12, compared with an estimated draw of 4.5 million barrels.<\/p>\n
Traders are awaiting official U.S. government inventory data later on Wednesday to confirm the API figures and are monitoring developments around the implementation of the U.S.-Iran agreement and the reopening of shipping routes.<\/p>\n