The Commodities Feed: Oil falls as US-Iran sign deal
Recent developments signal a substantial shift in oil dynamics, primarily driven by the US-Iran peace agreement. Per the full note from ing-think, oil prices have dropped significantly, with WTI now trading below $75/bbl and Brent seeing its lowest levels since March. The reopening of the Strait of Hormuz and the anticipated lifting of US sanctions on Iran could quickly enhance supply levels, with market participants now adjusting their expectations for 2026 demand, which the IEA forecasts to decline by 1.1 million barrels per day (b/d) compared to a previous estimate of 700,000 b/d. This evolving scenario suggests a need for traders to reassess their positions ahead of any potential normalization in oil flows.
What the desk is arguing
The desk argues that the US-Iran peace deal will lead to lower oil prices and shifting market dynamics. Enhanced supply could offset demand declines anticipated in the IEA's latest outlook, where oil demand is now expected to fall more significantly in 2026 than previously thought.
The IEA's downward revision of demand by 1.1 million b/d underscores the bearish sentiment in the market, further supported by recent US inventory data showing a significant draw of 8.3 million barrels, which indicates seasonal demand strength but is overshadowed by potential oversupply from Iran.
Where it sits in our coverage
Our consensus target for oil prices leans towards $1.075, with the following ranges from significant traders: - jpmorgan: Target of 1.10 by March 2026. - bofa: A more conservative stance with a target of 1.04 by March 2026.
This view contrasts slightly with bofa, whose bearish outlook aligns more closely with the anticipated decrease in demand, placing their forecast at the lower end of the range.
How other firms see it
Firms aligned with a bullish outlook, including jpmorgan, expect a recovery in prices driven by steadier supplies despite short-term bearishness. Conversely, bofa expresses a more cautious stance, anticipating ongoing weakness in demand to weigh on prices.
Traders should look at the correlated currency pairs such as USD/CAD, which often reflects movements in oil prices, as well as the nuances in Chinese demand indicators, which could also influence global oil trading patterns.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Oil prices have dropped as the US and Iran negotiate a peace agreement.
- 02The IEA's outlook reflects a significant demand decrease in 2026.
- 03US inventory levels showing substantial draws are not enough to offset the bearish sentiment from potential oversupply.
- 04Market participants should prepare for a reassessment of positions as the normalization of Iranian supply comes into focus.
Market implications
Traders should closely monitor the $75 mark for WTI and $80 for Brent as levels of significant interest. Watch for developments related to the US-Iran relationship that could catalyze further price movements, particularly as sanctions ease and supply chain adjustments occur.
Risks to this view
A key risk to this outlook would be any delays in the implementation of the peace agreement or unexpected complications in sanction lifting. Should geopolitical tensions resurge or if OPEC+ decides to intervene in output levels in response to price decreases, the bearish trajectory may reverse.
Articles The Commodities Feed: Oil falls as US-Iran sign deal 07:20 Commodities daily Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download 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 Ewa Manthey and Warren Patterson Oil prices extend declines as the US and Iran sign a peace agreement 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.
Metals Energy prices Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Ewa Manthey Commodities Strategist Ewa Manthey is a Commodities Strategist based in London.
She joined the bank in September 2022 and covers the entire commodities complex, with a particular focus on the metals markets. She has… Warren Patterson Head of Commodities Strategy Warren Patterson is Head of Commodities strategy based in Singapore. He joined the bank in April 2016 and covers the entire commodities complex.
Previously, he worked at a commodities trade house… In this article Energy – WTI moves below $75/bbl Metals – Gold rebounds despite hawkish Fed
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