Oil & Energy
US Oil Update: Futures Steady as Markets Await US-Iran Deal Signing
Crude oil futures were little changed in after-hours trading on Wednesday, as markets awaited the signing of a US-Iran framework agreement that could restore oil flows through the Strait of Hormuz amid mounting concerns about oversupply in 2027.Front-month West Texas Intermediate crude futures fell 0.5% to $75.65 per barrel, while Brent futures were down 0.3% to $78.70/bbl.US commercial crude oil inventories decreased by 8.3 million barrels to 418.2 mmbbls in the week ended June 12, the Energy Information Administration said in its weekly report on Wednesday. The EIA said crude inventories are now about 6% below the five-year average for this time of year.Global inventories remain relatively tight, with US crude stockpiles continuing to decline, said Soojin Kim, research analyst at MUFG, while projecting that Brent would remain in the $80-90/bbl range in the near term.On Wednesday, President Trump defended the US-Iran framework agreement, saying it could get signed as soon as Thursday. Earlier in the day, Trump had said that a memorandum of understanding with Iran was not final, and that he could resume a bombing campaign if he did not like it or if Iran did not "behave.""It's a memorandum of understanding. If it doesn't get done in 60 days, that's alright, we go back to bombing," Trump said in a media address at the G7 summit in France. The interim peace deal to end the conflict is set to extend the ceasefire for 60 days and reopen the Hormuz to all commercial vessels.The draft peace agreement reportedly envisions the rapid reopening of the Strait of Hormuz after a months-long closure that sent global energy prices soaring, and immediate sanctions waivers for Iranian oil.On the supply side, the International Energy Agency said the oil market will enter a significant supply overhang in 2027, with global supply set to surge by 8 million barrels per day and demand rising by 2 million b/d.Kpler strategists said that over 90 million barrels of stranded non-Iranian crude and about 70 million barrels of Iranian oil could return to the market as the Hormuz reopens and US restrictions are eased.The International Energy Agency slashed its outlook for oil demand in 2026, forecasting that global consumption will contract by about 1.1 million b/d, a downgrade of about 700,000 b/d from its previous assessment.Oil demand in Q2 is projected to be about 5 million b/d lower than the previous year, led by declines of 1.6 million b/d in China and 1.4 million b/d in OECD countries.The US Federal Reserve held rates steady on Wednesday. Lower interest rates could boost oil demand by reducing borrowing costs for consumers and businesses.