Oil prices slip as US–Iran temporary accord calms market fears

Oil prices fell by more than $1 per barrel on June 18 following the signing of a temporary agreement between the United States and Iran, which includes the reopening of the Strait of Hormuz and the lifting of US sanctions on Iranian oil, Reuters reports.

As of 08:27 Baku time, Brent crude futures dropped by $1.64, or 2.06%, to $77.91 per barrel. West Texas Intermediate (WTI) fell by $1.80, or 2.34%, to $74.99 per barrel.

The decline reversed gains recorded a day earlier after US President Donald Trump suggested the possibility of renewed bombings if Iranian authorities “don’t behave” properly.

Market analyst Tony Sycamore of IG said pressure on the market increased due to expectations of a faster return of Iranian oil to global markets following the Washington–Tehran memorandum.

The 14-point document launches a 60-day negotiation period. Under the agreement, Iran is expected to ensure duty-free passage of ships through the Strait of Hormuz, one of the world’s key oil and gas shipping routes, with full restoration of transit expected within 30 days.

However, the agreement leaves several major issues unresolved, including Iran’s nuclear programme, and outlines a proposed $300 billion reconstruction financing plan involving the United States and its partners.

Analysts note that while further downside for oil prices is possible in the short term, global supply constraints may limit the extent of the decline. Trump also commented that oil prices had fallen following the signing of the memorandum.

By Jeyhun Aghazada