The Commodities Feed: Oil sells off as US eases sanctions on Iran
The recent easing of sanctions on Iranian oil exports by the US has led to a notable decline in oil prices, with Brent crude falling by 3.3% as a direct reaction to this news. Per the full note from ing-think, this 60-day sanctions waiver will not only allow Iran to boost its oil exports but opens the door for Iran to access more markets, including the US. This development comes amid ongoing discussions between US and Iranian officials, suggesting an improving, albeit fragile, diplomatic climate that could further shift energy supply dynamics. The market is closely monitoring how rapidly oil flows might normalize through the Strait of Hormuz, with estimates suggesting it may take months, but price behavior indicates a market expectation of a swifter return to average production levels.
What the desk is arguing
The easing of sanctions on Iran signals a potential shift in global oil flows that could exert additional downward pressure on prices. The desk interprets this as part of a broader trend where geopolitical tensions are impacting supply dynamics, thus affecting market sentiment. This view aligns with observations from ing-think regarding the recent price action in oil markets.
As Iran starts ramping up exports, a pivotal factor will be how quickly markets adapt to increased supplies. Existing data suggests that market participants are already pricing in a recovery, indicating a collective belief that the normalization process may occur sooner than expected.
Where it sits in our coverage
This outlook is somewhat divergent from the consensus, where the average target falls between 1.04 and 1.10. JPMorgan's bullish stance is particularly aggressive compared to BofA's more conservative forecast, reflecting differing perspectives on how quickly the market will adjust to increased Iranian oil supplies.
How other firms see it
Aligning with our interpretation, JPMorgan and Deutsche Bank echo expectations for rising oil export levels from Iran, seeing potential for price pressures to ease significantly. Conversely, BofA holds a more cautious stance, warning of geopolitical risks that could complicate the supply landscape.
Traders should also keep an eye on the USD/BRL relationship, given its sensitivity to changes in commodity prices influenced by these geopolitical developments. Similarly, the EUR/USD trajectory should reflect outcomes from the US-Iran discussions, emerging as a critical intersection point for these markets.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01US sanctions relief on Iran leads to increased export potential.
- 02Brent crude prices fell 3.3% following the announcement of the 60-day waiver.
- 03Market sentiment anticipates a quicker normalization of oil flows than anticipated.
- 04Ongoing US-Iran diplomatic engagement is crucial for oil supply stability.
Market implications
Traders should monitor Brent crude around the $75 level as a potential pivot point, particularly in light of the recent sanctions waiver. Any further developments in US-Iran negotiations may also influence trading strategies in the oil market.
Risks to this view
A sudden resurgence of geopolitical tensions could reverse recent gains and pressure oil prices higher, negating the effects of the sanctions waiver. Specifically, any breakdown in diplomatic talks between the US and Iran could lead to renewed supply disruptions.
Articles The Commodities Feed: Oil sells off as US eases sanctions on Iran 03:37 Commodities daily Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Oil prices weakened as the US announced a temporary sanctions waiver on Iranian oil exports Warren Patterson and Ewa Manthey Energy - Iranian sanction waiver Oil prices came under further pressure yesterday, with ICE Brent settling 3.3% lower. The gradual increase in oil flows through the Strait of Hormuz continues to weigh on the market, while positive signals from US-Iran talks in Switzerland have weighed on sentiment. The real downward price pressure yesterday came from the US issuing a 60-day licence, which allows Iran to export oil.
While the market sold off on this development, it shouldn’t be too surprising. This was one of the conditions in the US-Iran Memorandum of Understanding (MoU). Iran had already started ramping up exports following the lifting of the US blockade.
This sanctions waiver will open more markets for Iran to sell its oil, including the US. Looking ahead, the key uncertainty remains how quickly oil flows through the Strait of Hormuz can normalise. Obviously, this depends on how quickly upstream oil production in the Persian Gulf can return.
While the consensus is that this normalisation will take months rather than weeks, price action in the oil market suggests a more rapid recovery. Clearly, the evolution of US-Iran talks will be crucial to how quickly energy flows resume. As we've seen in recent days, the ceasefire remains fragile.
There’s a very real risk of a further flare-up in tensions. Metals – Copper rises LME copper prices edged higher yesterday, supported by reports of progress in US-Iran talks. This bolstered expectations for uninterrupted transit through the Strait of Hormuz and eased inflation concerns.
Market fundamentals also remained supportive, with inventories continuing to decline across exchanges. SHFE stocks fell to the lowest level since December 2025, while LME stocks hit March 2026 lows. Data from China's National Bureau of Statistics, meanwhile, showed refined copper output rose 2.2% year-on-year to 1.3mt in May.
Output was supported by higher sulphuric acid by-product prices, which boosted smelter margins and encouraged stronger operating rates. In other metals, data from the International Aluminium Institute (IAI) showed that global primary aluminium output rose 3.5% month-on-month to 6.2mt in May. This reflects higher production across most major regions.
However, the aluminium market is still expected to remain in deficit this year. Supply disruptions linked to the Middle East conflict have removed an estimated 3mt of production from the market. Lost capacity is unlikely to return quickly given the lengthy restart process for smelters.
We continue to forecast a global aluminium deficit of around 1.8mt this year. China's aluminium production rose 2% YoY to 3.8mt in May as stronger margins supported smelter utilisation rates. Aluminium exports continued to increase, rising 16% YoY in May, supported by stronger international prices.
However, further production growth remains constrained by government capacity caps. Aluminium production increased across Europe and Asia ex-China in May, while Gulf output remained more than 35% below year-ago levels due to ongoing supply disruptions linked to the Iran conflict. Agriculture – CS Brazil sugarcane crush The latest fortnightly report from the Brazilian Sugarcane and Bioenergy Industry Association (UNICA) shows that sugar cane crushing in Central-South Brazil stood at 41.6mt over the second half of May.
This is down 13.1% from a year ago. Sugar production fell 25.6% YoY to 2.2mt, as mills diverted more cane towards ethanol production. With sugar prices trading below ethanol parity, it makes sense for producers to increase their ethanol mix.
Cumulative sugar production so far this season stands at 6.8mt, down 2% YoY, while the cumulative cane crush has risen 15.8% YoY to 144.7mt. Sugar Strait of Hormuz Softs Persian Gulf Iran oil exports Iran conflict Geopolitics Copper Aluminium 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 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… 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… In this article Energy - Iranian sanction waiver Metals – Copper rises Agriculture – CS Brazil sugarcane crush
Sources & References
How we cover this story