US-Iran Deal Puts Oil Price Pressure Below $80
Oil prices have dropped below $80 per barrel as markets price in a potential short-term US-Iran deal that could reopen the Strait of Hormuz, according to ING analysts Warren Patterson and Ewa Manthey. The renewed weakness in the market comes amid growing signs of a possible agreement between the two nations, which would see the Strait reopened.
The analysts note that there are still significant gaps between the US and Iran when it comes to managing the Strait and the nuclear issue, making any deal fragile and prone to unraveling quickly. Tanker movements through the Strait remain highly constrained, keeping the global oil market tight.
US inventory numbers show an increase in crude oil inventories of 2.7m barrels over the last week, while refined product stocks saw mixed results. If a deal holds and oil flows from the Persian Gulf normalize, market attention will turn to the supply and demand balance in the fourth quarter and 2027.
A recovery in Persian Gulf supplies, stronger OPEC+ output following on-paper supply increases, and UAE supply increases all point towards a comfortable balance sheet in 2027. However, a large part of the expected surplus next year will be absorbed by restocking demand.