Oil prices fell for a second consecutive day as details of the US-Iran interim deal emerged. WTI crude dropped $4.70 to $76.05/bbl, the lowest since early March. The agreement includes permission for Iran to sell oil immediately, with sanctions waived on banking and transport to facilitate flows, per the Wall Street Journal.
The Strait of Hormuz reopening is the central mechanism. The chokepoint handles roughly 20% of global oil supply and had been effectively closed since late February when the US-Iran conflict began. The deal is set to be signed in Switzerland on June 19 and reportedly includes dismantling Iran's nuclear program in exchange for sanctions relief.
Fresh supply from Iran is expected to refill Chinese strategic stockpiles, which were drawn down as China curtailed purchases during the conflict. Higher OPEC+ export quotas and output from the UAE, which left the cartel during the conflict, are also expected to replenish global refineries. US crude inventories at 426.5 mb are already 5% below the five-year average.
The speed of the selloff reflects the market pricing in supply normalization before it happens. Mizuho's Bob Yawger said crude oil is 'sliding fast on the assumption the Strait of Hormuz will open soon.' Before the war, Brent was at $72.48 and WTI at $67.02 on February 27.
US gasoline demand is running at 8.73 mb/d, below 9.17 mb/d a year ago, suggesting softer domestic consumption. OPEC cut its 2026 global demand growth forecast to 1.17 mb/d in May. The IEA warned that with inventories already drawn heavily, further price volatility remains likely as the market transitions into peak summer demand.
The speed of this selloff — 26.5% in one month — is rare outside of financial crises. For buyers, this creates a window to lock in Q3 and Q4 supply at sub-$80 levels. But the deal's execution risk is real. Hezbollah has already said Iran won't sign without Israel's withdrawal from Lebanon. If the June 19 signing stalls, oil could spike $10-15 overnight. Procurement teams should layer hedges rather than go all-in on spot purchases.