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

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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.

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