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US-Iran Deal Delays Could Deepen Oil Supply Tightness Through August, Wells Fargo Says

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Oil market volatility has intensified since the US attack on Iran, with West Texas Intermediate swinging between 5% and 10% on several trading days, Wells Fargo said Wednesday.

The firm said traders continue to react to headlines about a potential US-Iran agreement, as uncertainty over diplomatic progress drives sharp moves across energy markets.

Global oil inventories have continued to decline while consumers increasingly rely on stored supplies, and the International Energy Agency expects supply constraints to worsen during July and August, Wells Fargo said.

Wells Fargo said developing economies face the greatest risk from potential fuel shortages, while a prolonged diplomatic stalemate could strengthen inflation pressures in the US and globally over the next one to two months.

The firm said mounting pressure on Washington and Tehran could eventually produce an agreement that restores energy flows, though inflation is likely to remain elevated even if the two sides reach a deal soon.

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