The Commodities Feed: Oil Falls As US-Iran Sign Deal

Oil prices extend declines as the US and Iran sign a peace agreement, with Middle East supply expected to recover sooner than previously anticipated. Sentiment is further weighed by the IEA’s weaker 2026 demand outlook

Energy – WTI moves below $75/bbl

ICE Brent fell to its lowest since early March, while NYMEX WTI dropped more than 2% to below $75/bbl on Thursday morning. The move follows a fast-tracked US-Iran peace agreement, with terms effective immediately, including the reopening of the Strait of Hormuz and a halt to fighting. Iran expects a swift lifting of US oil sanctions, supporting a return of exports. However, uncertainty remains about how quickly flows can normalise, with ramp-up timelines dependent on operational, logistical and sanction-related adjustments.

The IEA’s latest monthly report adds to the bearish tone. It now sees global oil demand falling by 1.1m b/d in 2026, compared with a 700k b/d decline previously. Demand is expected to rebound by 2m b/d in 2027 amid normalising trade flows, lower prices and improved economic conditions. On the supply side, output is forecast to drop by 3.9m b/d to 102.4m b/d in 2026, before rising by 8m b/d in 2027.

US inventory data was tighter. EIA figures show crude stocks fell by 8.3m barrels last week, well above expectations and the largest draw since mid-February, broadly in line with the API data. The decline reflects seasonal demand strength. Commercial inventories stand just above 418m barrels, around 6% below the five-year average, with cumulative draws of 47.5m barrels over the past two months. Including SPR flows, total stockpiles declined for a tenth consecutive week to 758.5m barrels, the lowest since 1985. Cushing inventories fell to just above 20m barrels, the lowest since October 2014. Imports dropped by 754k b/d, while exports eased to 4.3m b/d. Refinery utilisation increased to 96.7%.

Product inventories were mixed, with gasoline stocks falling by 906k barrels, while distillates rose by 951k barrels.

In gas, funds continued to reduce net long positions in TTF, selling 24.2TWh over the past week, leaving a net long of 234.9TWh. Expectations of a reopening of the Strait of Hormuz are likely to sustain further liquidation pressure.

Metals – Gold rebounds despite hawkish Fed

Gold rose in Asian trading, recovering losses from the previous session as investors balanced a more hawkish Federal Reserve outlook with lingering geopolitical uncertainty. An interim US-Iran peace agreement helped ease concerns over energy supply disruptions, pushing oil prices lower and supporting risk sentiment.

While markets are increasingly pricing in a Fed rate hike later this year, uncertainty over the implementation of the agreement and the reopening of the Strait of Hormuz continued to underpin safe-haven demand. Spot gold climbed back above $4,320/oz, recouping much of Wednesday’s decline.