Oil prices edge lower as markets weigh impact of US–Iran deal

Oil prices slipped slightly on June 17 as investors assessed the implications of a U.S.–Iran peace deal, while lingering uncertainty over the full resumption of shipping through the Strait of Hormuz limited further declines.

Both benchmarks were down about 0.2% by 06:30 GMT, with Brent crude futures falling 15 cents to $78.81 a barrel and U.S. West Texas Intermediate (WTI) dropping 12 cents to $75.93 a barrel, Reuters reports. 

On June 16, both contracts had already fallen about 5% for a second consecutive session, hitting three-month lows on expectations that a potential U.S.–Iran agreement could restore oil flows through the strategic waterway.

“Markets are broadly stripping out the embedded geopolitical risk premium in oil prices,” said Priyanka Sachdeva.

“That said, the path toward ⁠normalisation remains far from straightforward. While political agreements may be progressing, physical tanker traffic through the Strait has yet ⁠to fully recover.”

The deal is expected to involve the United States lifting its blockade of Iranian ports, while Tehran would permit oil tanker traffic through the Strait of Hormuz, which had been effectively restricted following U.S. and Israeli strikes on February 28.

“Oil markets retreated on expectations the Strait of Hormuz would reopen following the peace agreement, but traders held off further selling pending details,” said Hiroyuki Kikukawa.

WTI is expected to remain volatile within a range of around $10 above or below $80 a barrel, he added.

Before recent disruptions, roughly one-fifth of global crude oil and liquefied natural gas supplies passed through the Strait of Hormuz.

Details of the interim agreement began emerging on June 16, with U.S. President Donald Trump saying it would exclude the development of a nuclear weapon by Tehran, while a U.S. official said it would allow Iran to resume oil sales upon signing.

The memorandum of understanding, not yet made public, reportedly extends a fragile ceasefire agreed in April by another 60 days to allow space for negotiations toward a permanent settlement.

However, analysts caution that a full recovery in production and refining could take weeks, months, or even years.

Israel has distanced itself from both the April ceasefire and the latest U.S.–Iran arrangement, adding to uncertainty over its durability.

Separately, Israeli drone strikes targeted three vehicles in southern Lebanon on June 16, killing at least four people and injuring others, according to Lebanon’s National News Agency, prompting a rare public rebuke from Trump.

In global energy indicators, China’s crude oil throughput fell 9.1% in May year-on-year to its lowest level in nearly four years, suggesting refiners are drawing on inventories amid the Iran conflict.

Meanwhile, the American Petroleum Institute reported a sharper-than-expected decline in U.S. crude stocks, falling by 8.3 million barrels in the week ending June 12, compared with expectations for a 4.6 million-barrel draw. Official data from the Energy Information Administration is due at 10:30 a.m. ET on June 17.

By Sabina Mammadli