Oil Prices Ease as Markets Assess US-Iran Deal and Strait of Hormuz Recovery

Oil prices edged lower on Wednesday as investors evaluated the implications of a preliminary peace agreement between the United States and Iran, while uncertainty surrounding the full reopening of shipping routes through the Strait of Hormuz prevented a steeper decline.

By 09:30 a.m. Saudi time, Brent crude futures were down 15 cents, or about 0.2 percent, at $78.81 per barrel. US West Texas Intermediate crude fell 12 cents, also around 0.2 percent, to $75.93 per barrel.

The modest losses followed sharp declines over the previous two sessions. On Tuesday, both benchmarks dropped roughly 5 percent, extending Monday’s sell-off and pushing prices to their lowest levels in three months. Markets reacted positively to expectations that the US-Iran agreement could pave the way for the restoration of oil shipments through the Strait of Hormuz, a vital route for global energy trade.

Analysts said traders have largely begun removing the geopolitical risk premium that had built up during months of conflict in the region. However, they cautioned that the situation remains uncertain because shipping activity has not yet returned to normal.

The proposed agreement would reportedly see Washington lift restrictions on Iranian ports while Tehran allows the passage of oil tankers through the Strait of Hormuz, which has faced severe disruptions since the outbreak of hostilities following US and Israeli strikes on Iran on Feb. 28.

Market participants remain cautious as many details of the memorandum of understanding have yet to be released. The agreement is expected to extend a fragile ceasefire reached in April by another 60 days, giving negotiators more time to work toward a permanent settlement.

US President Donald Trump said the arrangement would prevent Iran from obtaining a nuclear weapon, while US officials indicated that Tehran would be allowed to resume oil exports once the agreement is formally signed.

Despite the progress, industry experts warned that restoring production, refining operations and shipping flows to pre-war levels could take weeks or even months. Continued uncertainty has been fueled by Israel’s distance from both the April ceasefire and the latest agreement.

Regional tensions also remained visible after Israeli drone strikes reportedly targeted vehicles in southern Lebanon on Tuesday, killing at least four people and injuring others. The incident drew criticism from Trump and raised fresh concerns about the durability of the ceasefire.

Meanwhile, weaker demand indicators also weighed on oil markets. Data showed China’s crude oil processing activity fell 9.1 percent in May from a year earlier, reaching its lowest level in nearly four years. The figures suggested Chinese refiners may be relying more on existing inventories accumulated during the conflict.

In the United States, industry data indicated crude inventories fell by 8.3 million barrels in the week ending June 12, exceeding forecasts for a decline of 4.6 million barrels. Investors were awaiting official inventory figures from the Energy Information Administration later in the day for further direction on market conditions.