The Commodities Feed: Oil falls as Trump signals Iran deal is close
ING’s commodities desk warns that oil’s current dip below $90/bbl is fragile, as Trump’s signal of an imminent Iran deal may prove premature. The desk frames this as a temporary reprieve, noting that without a verified ceasefire, supply disruptions from the Persian Gulf will push Brent to $120-130/bbl by late July. The broader currency implications are limited for now, but further oil upside would strengthen the USD against commodity-linked and EM currencies.
What the desk is arguing
ING argues that the Trump administration’s signalling of a near-term Iran deal is not yet credible, despite positive noise. Per the full note , the desk stresses that Tehran has remained silent, and even if a ceasefire is signed, it could be fragile and easily collapse if nuclear talks stall.
ING cites the scale of supply disruptions already in place—Iranian output fell 546k b/d in May alone as the US blockade tightens. Without a verified resumption of flows, Brent could rally to $120-130/bbl by late July when seasonal demand peaks and inventories are drawn down.
The counterfactual the desk implicitly rejects is that a rapid deal could cap oil at current levels. ING believes the market is underpricing the probability of a breakdown in negotiations, given the repeated pattern of false starts.
Key takeaways
- 01Trump says Iran ceasefire deal could be signed this weekend, but Tehran remains quiet; ING is cautious.
- 02Brent fell below $90/bbl on the news, but supply disruptions are intact and growing.
- 03Iran’s May output dropped 546k b/d due to the US blockade; OPEC output fell 177k b/d overall.
- 04Without a deal, ING sees an inflection point in late July, pushing Brent to $120-130/bbl.
Market implications
Watch for further headlines out of Tehran or the Strait of Hormuz. A failure to extend the ceasefire could trigger a sharp oil rally, boosting the USD against commodity currencies like CAD, NOK, and AUD. Near-term, the oil price remains the key driver for these pairs.
Risks to this view
A verified and durable deal that restores Iranian oil flows would invalidate the bullish call, likely sending Brent back toward $70-80/bbl. Any positive signal from Tehran this weekend would increase that probability, so traders should monitor the official Iranian response closely.
Articles The Commodities Feed: Oil falls as Trump signals Iran deal is close 02:24 Commodities daily Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Oil prices are under pressure this morning as President Trump says a ceasefire deal that resumes energy flows through the Strait of Hormuz could be signed this weekend Warren Patterson and Ewa Manthey Energy – Peace deal hopes re-emerge What a week on the geopolitical front. It started with a re-escalation between the US and Iran, only to end with President Trump saying a deal could be signed this weekend. It’s not the first time we’ve been in this position.
Trump has said many times before that a deal is very close, only for hostilities to resume. However, there does appear to be more positive noise around the deal this time, not just from the US but also from other parties involved in the negotiations. Obviously, the key is the message coming out of Tehran.
And for now, it has been very quiet. Therefore, we would be cautious about assuming that the extension of the ceasefire is a done deal. Even if it is, it could be fragile.
And clearly, if nuclear talks do not progress, it could very easily fall apart. The price action in oil markets is no surprise, with Brent falling below $90/bbl on the latest developments. The relatively benign price action in recent weeks masks the scale of the supply disruptions from the Persian Gulf.
However, in the absence of a deal, this is unlikely to last. We believe the market reaches an inflection point in late July if we do not see oil flows resuming before then. This is when inventory levels and seasonally stronger demand push prices significantly higher towards $120-130/bbl.
OPEC released its latest monthly oil market report yesterday. The group’s production continued to decline in May, with output falling 177k b/d month-on-month to 18.8m b/d. Iran saw the biggest decline, falling 546k b/d, as the US blockade puts pressure on its oil industry.
This large decline was offset by signs of supply increases from other Persian Gulf producers, which ties in with recent reports that more oil is flowing through the Strait of Hormuz. Saudi output increased 157k b/d MoM, while the UAE and Iraq increased output by 87k b/d and 75k b/d MoM, respectively. OPEC remains fairly constructive on global oil demand, expecting it to grow just shy of 1m b/d YoY in 2026.
This is down from a previous forecast of 1.17m b/d year-on-year, though. Most other agencies forecast a contraction in demand this year amid supply disruptions in the Middle East. US natural gas futures sold off yesterday, with Henry Hub settling a little more than 3% lower.
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