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US Oil Update: Crude Falls After US-Iran Peace Deal Signals Supply Boost

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Crude oil futures settled lower in after-hours trading on Tuesday, extending losses from the previous session, as investors weighed the prospect of increased Iranian crude exports and a gradual reopening of the Strait of Hormuz following a peace agreement between the US and Iran.

Front-month West Texas Intermediate crude futures tumbled 5.1% to $76.62 per barrel, while Brent futures plunged by 4.4% to $79.48/bbl.

Soojin Kim, research analyst at MUFG, said optimism about a gradual recovery in Gulf exports has reduced the geopolitical risk premium built up during the conflict.

On Tuesday, President Trump said that he's open to sending details of the peace agreement with Iran to members of Congress, according to media reports, as US lawmakers from both parties raise questions, saying they should vote on any final deal.

The preliminary deal would extend the US-Iran ceasefire for 60 days and create a framework for future negotiations over Tehran's nuclear program and other issues. Though the agreement's text has not been released, Trump has said he would unveil details on Friday.

A senior US official, in an emailed response to, described the deal as "performance-based," noting that Iran can access the agreement's benefits only if it abides by its commitments.

The conditions include not pursuing a nuclear weapon, neutralizing its enriched uranium and not interfering with traffic in the Strait of Hormuz, the official said.

Though market participants have welcomed the prospect of increased crude flows via the Strait of Hormuz, RBC Capital Markets analysts said the operational challenges of reopening the Strait could take months to resolve.

There are about 118 laden tankers trapped in strategic waterways, according to Kpler. However, though the vessels could leave within 10-15 days, Kpler analysts said they could deliver an early spike in transits without boosting regional production.

Meanwhile, market participants are still grappling with whether the Strait has been mined, whether Iran retains de facto operational control, and how any transit tolls would be structured and collected.

RBC Capital Markets analysts said the core MoU tentpoles remain unchanged from April and center on lifting the double blockade and reopening the Hormuz.

On the supply front, the US will reportedly also allow Iran to immediately begin selling oil and fuel under the memorandum of understanding between the two sides, reached to end the conflict.

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