FINWIRES · TerminalLIVE
FINWIRES

US Oil Update: Futures Drop After US Authorizes Iranian Crude Sales

By

Crude oil futures fell in after-hours trading on Monday after the US issued a temporary license authorizing the sale of Iranian crude and petroleum products, easing supply concerns and signaling significant progress in negotiations to end the conflict in the Middle East.

Front-month West Texas Intermediate crude futures dropped by 1.8% to $75.15 per barrel, while Brent futures were down 3.2% to $78.28/bbl.

Soojin Kim, a research analyst at MUFG, said the prospect of strong supply, combined with softer Chinese demand, has weighed on prices and reduced the war-related risk premium.

The US Treasury Department's Office of Foreign Assets Control issued "General License X" on Monday, granting a 60-day waiver that permits the production, delivery, and sale of Iranian-origin crude, petroleum products, and petrochemicals through Aug. 21.

The waiver also allows for the importation of Iranian crude oil and other petrochemical and petroleum products into the US.

"In line with the ongoing productive talks in Switzerland, Iran has committed to free and open transit in the Strait of Hormuz and to permit International Atomic Energy Agency (IAEA) inspectors into their country," US Treasury Secretary Scott Bessent said in a post on X.

TankerTrackers said Iran has exported 36 million barrels of crude oil since June 15, and about an equal amount remains afloat in Iran.

Meanwhile, the US and Iran on Monday made progress during peace talks aimed at reaching a final deal within 60 days, including an agreement to end hostilities in Lebanon.

Vice President J D Vance said that talks between the US and Iran have made "great progress."

Earlier on Monday, Iranian Foreign Minister Abbas Araghchi said the mediators, Qatar and Pakistan, had managed to ease some of the tensions over Lebanon.

"Tireless Pakistani and Qatari mediation has delivered major progress to end Lebanon War," Araghchi said in a social media post on X. "Oil and petrochem exports are waived, blockade lifted, some frozen assets released, and major reconstruction & development plan launched for Iran."

On the supply front, the latest shipping data show an uptick in oil and liquefied natural gas tanker traffic through the Strait of Hormuz over the 19-21 June period, though overall flows remain below pre-conflict levels.

Kpler said a total of 71 confirmed vessel transits via the strategic waterway, with activity peaking at 35 crossings on Saturday.

However, tanker traffic via the Strait remains about 15% below pre-conflict levels, EBW Analytics said, adding that alternative supply routes and weakening Asian demand are helping loosen balances.

Related Articles

Oil & Energy

Iranian Negotiators Still Plan to Attend Switzerland Peace Talks Despite Renewed Closure of Hormuz Strait, Media Reports Say

Oil & Energy

Iran Closes Strait of Hormuz Again in Response to Israel's Saturday Attacks on Lebanon, Media Outlets Say

Oil & Energy

Weekly Crude Prices Plunge to 3-Month Low as US-Iran Deal Reopens Strait of Hormuz

Crude prices declined below $80 per barrel to a three-month low this week after an interim US-Iran peace deal dismantled the Persian Gulf blockade, clearing the way for million barrels of stranded oil to return to a market already facing weak demand forecasts.West Texas Intermediate settled at $77.54/bbl from $84.29/bbl the previous week, while Brent closed at $80.38/bbl from $86.85/bbl a week earlier.Brent crude futures fell for their second straight week following the peace deal, losing about 8% so far this week, while West Texas Intermediate futures shed about 10%.Both contracts fell to their lowest levels since early March.The selloff was triggered by a 60-day memorandum of understanding signed by the US and Iran.On Thursday, the US Central Command officially lifted its maritime blockade, allowing commercial tankers to safely resume transit through the vital Strait of Hormuz.Several media outlets confirmed that idling Saudi Arabian supertankers and previously dark vessels had begun moving, citing shipping data.Kpler estimated that the reopening will unlock a massive backlog of oil, including 90 million barrels of stranded non-Iranian crude and roughly 70 million barrels of Iranian oil.While analysts caution that production ramp-ups and lingering mine-clearing security assessments could take up to six months to fully normalize, the immediate release of floating storage represents an enormous near-term increase in available supply.On the supply side, the US Energy Information Administration showed commercial crude inventories drew down sharply by 8.3 million barrels.Adding long-term pressure, the International Energy Agency slashed its 2026 demand outlook by 1.1 million barrels per day, citing severe economic slowdowns in China and OECD nations.The IEA warned of a massive supply overhang by 2027, projecting global supply to surge by 8 million b/d, while demand increases by a modest 2 million b/d.This stands in stark opposition to OPEC's bullish forecast, which expects oil demand to steadily expand to 113.3 million b/d by 2030.However, analysts expect a decline in prices. "Oil prices are unlikely to fall much further in the near term, even as they 'grind lower' over time," Goldman Sachs analysts noted.Meanwhile, the US oil rig count remained unchanged at 433 in the week ending June 18, according to data from Baker Hughes (BKR) released Thursday. That compares with 438 oil rigs in operation a year earlier.The consolidated North American oil and gas rig count, a key early indicator of future production levels, rose by seven to 749 from 742 the previous week.

$BKR