Oil Extends Decline as Markets Reassess Iran Deal

Oil prices edged lower on Wednesday, extending a sharp selloff from the previous session as investors continued to evaluate the implications of a preliminary agreement between the United States and Iran. However, lingering uncertainty over the timing and scope of a full reopening of the Strait of Hormuz helped prevent a deeper decline.

Brent crude futures fell 23 cents, or 0.3%, to $78.73 per barrel, while U.S. West Texas Intermediate (WTI) crude declined 34 cents, or 0.5%, to $75.71 a barrel.

Latest Oil Prices:

WTI Crude • 76.00 -0.05 -0.07%

Brent Crude • 78.90 -0.06 -0.08%

Murban Crude • 73.84 +2.03 +2.83%

WTI Midland • 77.00 +0.97 +1.28%

Opec Basket • 97.18 -1.74 -1.76%

Indian Basket • 2 days 92.58 +0.03 +0.03%

Natural Gas • 3.185 -0.054 -1.67%

Gasoline • 2.902 +0.021 +0.73%

Heating Oil • 3.175 +0.004 +0.14%

The losses followed a nearly 5% plunge in the previous session that pushed both benchmarks to their lowest levels in three months, as hopes grew that the diplomatic breakthrough between Washington and Tehran could restore smoother oil flows through one of the world's most critical energy chokepoints.

Market participants have increasingly started to unwind the geopolitical risk premium that had been built into oil prices during months of heightened tensions in the Middle East.

Analysts said the tentative agreement has prompted traders to reassess supply disruption risks, particularly after reports indicated that restrictions affecting Iranian ports could be eased in exchange for the restoration of tanker transit through the Strait of Hormuz.

The strategic waterway handles a significant share of global crude exports and has remained severely disrupted since military escalation involving the United States, Iran, and Israel earlier this year.

Despite the agreement, analysts cautioned that the market has yet to see a meaningful return of tanker traffic through the corridor, leaving considerable uncertainty over how quickly normal operations can resume.

While expectations of a gradual reopening have improved sentiment, energy traders remain reluctant to accelerate selling until clearer evidence emerges that crude shipments are moving freely through the region.

Industry observers noted that political agreements do not immediately translate into operational normalization, particularly in areas where security risks and logistical challenges remain elevated.

Some analysts expect WTI crude to remain volatile around the $80-per-barrel level in the near term as investors weigh competing influences from geopolitical developments and underlying supply-demand fundamentals.

Energy market experts also warned that restoring oil flows to pre-conflict levels could take weeks, months, or even longer, depending on the pace of implementation and regional security conditions.

Adding to market dynamics, data from the American Petroleum Institute (API) showed that U.S. crude oil inventories fell by 8.3 million barrels during the week ending June 12, substantially exceeding market expectations for a decline of approximately 4.6 million barrels.

The larger-than-expected drawdown points to resilient demand conditions in the world's largest oil-consuming economy and could provide some support to prices despite broader geopolitical-driven weakness.

Investors are now awaiting official inventory figures from the U.S. Energy Information Administration (EIA), which could trigger further market volatility and provide fresh insight into the balance between supply and demand.