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Summary
- Details emerge of interim U.S.-Iran peace deal
- IEA sees supply significantly overtaking demand next year
- U.S. crude stocks drop sharply, industry data shows
(Reuters) – Oil prices held steady near a three‑month low on Wednesday as investors weighed the impact of a peace deal and the International Energy Agency’s warning of a supply overhang next year against firmer near-term demand to replenish inventories.
Brent crude futures were up 30 cents, or 0.4%, to $79.26 a barrel by 1010 GMT, and U.S. West Texas Intermediate gained 24 cents, or 0.3%, to $76.29. Both contracts hit their lowest level since early March earlier in the session.
Both had fallen about 5% on Tuesday, fuelled by hopes that a U.S.-Iran deal would allow oil to leave the Gulf.
“The current baseline is that the Strait of Hormuz will reopen and that ships will begin transiting through this critical chokepoint in both directions,” PVM Oil analyst Tamas Varga said. “The gradual resumption of oil flows, however slow, will materially affect the oil balance,” he added.
IEA SAYS INVENTORIES TO BE RESTOCKED IN NEXT FEW MONTHS
In its first look at 2027, the IEA said the oil market will enter a significant supply overhang, with global supply set to surge by 8 million bpd and demand rising by just 2 million bpd.
In the near term, the agency said the Iran-U.S. deal should provide an opportunity to replenish depleted inventories or build new strategic reserves.
“Markets may be underpricing the depth of the supply glut coming online,” said Crispus Nyaga, research analyst at Empire FX.
Details of the interim peace deal began to emerge on Tuesday, with a U.S. official saying it would allow Iran to sell oil upon signing.
The memorandum of understanding, not yet public, extends by another 60 days a tenuous ceasefire agreed in April, to allow room for talks toward a permanent truce.
Still, industry officials say a full return to pre-war production and refining levels is likely to take weeks, months or even years.
Israel has distanced itself from both the April ceasefire and the latest U.S.-Iran pact, fuelling uncertainty about whether it will hold.
Goldman Sachs said the deal had reduced upside tail risks to energy prices, prompting it to lower its Brent price forecast to $80 a barrel for the fourth quarter of 2026, from a previous $90.
U.S. crude stocks fell 8.3 million barrels in the week ended June 12, market sources said, citing American Petroleum Institute data.
This exceeded expectations for a draw of 4.6 million barrels, with official numbers due from the Energy Information Administration at 10:30 a.m. ET (1430 GMT) on Wednesday.
Additional reporting by Yuka Obayashi in Tokyo and Jeslyn Lerh in Singapore; Editing by Clarence Fernandez, Kevin Liffey and Alexander Smith
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