Oil prices have remained near their lowest levels in three months, continuing a downward trend for the fourth straight session. This decline has been primarily driven by market speculation of a potential increase in global oil supply following a U.S.–Iran agreement designed to reopen the Strait of Hormuz. West Texas Intermediate crude fell below $77 per barrel, and Brent was close to $79, as both benchmarks faced pressure from the anticipation that Iranian oil exports could soon re-enter the global market under this interim framework. The recent drop marks the longest losing streak for oil prices this year.
Traders’ sentiment has weakened amid expectations that the agreement will help reduce geopolitical tensions in the Middle East and reinstate the flow of oil through the Strait of Hormuz, a crucial channel for international energy shipments. Yet, analysts express caution, suggesting that the resumption of shipping activities might progress slowly due to necessary security measures and logistical challenges in the region.
According to the draft agreement, Iran would have a 60-day window to restart oil exports under less restrictive conditions, while the United States would lift certain sanctions and facilitate maritime traffic through the strategic shipping lane. Despite the anticipated boost in supply, global oil inventories have been tightening recently, with industry estimates indicating significant reductions in U.S. crude stockpiles. This dynamic has complicated price trends, even as long-term projections increasingly account for the possibility of heightened Iranian oil production.
Market observers are closely monitoring whether the agreement will be successfully implemented and how swiftly physical oil flows can resume. Futures pricing reflects a dual outlook, incorporating both the immediate optimism surrounding increased supply and the persistent uncertainty regarding the agreement’s execution.