How the U.S.-Iran Deal Put A Higher Floor Under Oil Prices
OPEC’s Oil Demand Bet Is on India, Not Europe Shipping companies remain cautious about… What I Cover Tsvetana Paraskova is an energy and commodities journalist who has contributed to Oilprice.com for nearly a decade, covering global energy markets, commodities,… Analysts are back to expecting a huge oil glut next year as they see the U.S.-Iran deal as the end of the worst of the Middle East crisis.
The deal is actually just the beginning of long processes of negotiations, a reopening of the Strait of Hormuz, recovery of the more than 13 million barrels per day (bpd) of shut-in oil production in the Middle East, and a world so low on inventories – except in China – that refilling these will support oil prices for months to come.
Every assumption about global oil demand and supply currently rests on the premise that the U.S.
and Iran have reached a final and lasting peace deal.
The 14-point Memorandum of Understandingincludesa commitment to negotiating and achieving a final deal in a “maximum” of 60 days, extendable with mutual consent, for an unspecified time.
Regarding the reopening of the Strait of Hormuz, Iran will “make arrangements using its best efforts” to allow safe passage of commercial vessels through the Strait, without any fees or tolls, according to a BBC summary of the key points in the agreement.
So the memorandum is only a deal to continue negotiating a deal, in which the Trump Administration’s only win was managing to bring U.S.
average gasoline price back below $4 per gallon, where the price was before the war.
Iran, for its part, appears to have won everything else, including sanctions waivers on its oil sales, and a $300-billion reconstruction fund.
The oil and stock markets cheered the announcement of the deal, withBrent Crude pricesslumping below $80 per barrel this week, the lowest level since March.
It appears that traders and other oil market participants are unwinding their war-risk premium bets in the hopes that free-flowing oil will return quickly, flood the market, and crash oil prices.Related: Why the Moment for a Deal Could Not Be Better for Iran In its first look at 2027 market balances, the International Energy Agency (IEA) this weeksaidthat the oil market will see a significant overhang next year.
Demand is expected to rise by 2 million barrels per day from 2026, but supply will surge by 8 million bpd, according to the IEA’s monthly Oil Market Report.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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