Key Takeaways

• Five-day losing streak: Brent fell 0.9% to $78.23 per barrel, while WTI slipped 1.2% to $75.16 — both at their lowest since March 2.
• 10% crash in two sessions: The pace of the selloff underscores how dramatically market sentiment has shifted.
• Iran deal the driver: The MOU paves the way for Hormuz reopening and the return of Middle Eastern crude to global markets.
• Iran to sell oil immediately: Under the deal, Tehran can resume oil exports the moment the agreement is signed on Friday.
• U.S. blockade to lift: Washington will end its blockade of Iranian ports as part of the framework.
• Geopolitical risk premium unwinding: The sharp price decline reflects a rapid repricing of the war premium built up since late February.
• Shipping companies await clarity: Operators are holding back pending details on security arrangements and operating conditions.
• Analysts urge caution: Full normalization of Hormuz flows could take considerably longer than markets currently assume.
• API inventory shock: U.S. crude stockpiles fell 8.33 million barrels last week — nearly double the 4.5 million expected.
• Gasoline builds: Gasoline inventories rose 2.48 million barrels, raising some demand questions.
• Distillates barely moved: Stocks edged down just 10,000 barrels.
• EIA data due today: Official government inventory figures expected to confirm the tight supply picture.

Oil prices extended losses on Wednesday, falling for a fifth straight session, as investors weighed the prospect of increased global supply following a U.S.-Iran peace agreement, while a sharp drawdown in U.S. crude inventories provided some support to the market.

As of 02:52 ET (06:52 GMT), Brent oil futures expiring in August fell 0.9% to $78.23 per barrel, while West Texas Intermediate (WTI) crude futures slipped 1.2% to $75.16 per barrel.

Both benchmarks hit their lowest levels since March 2 and have tumbled roughly 10% in the last two sessions.

Iran Deal Reshapes the Supply Outlook

Traders remained focused on the potentially bearish implications of the U.S.-Iran peace deal, which could pave the way for the gradual reopening of the Strait of Hormuz and the return of additional Middle Eastern crude to global markets.

Under the deal, the United States will end its blockade of Iran’s ports, while Tehran will restore maritime traffic through the Strait of Hormuz.

The pact — due to be signed on Friday — will rule out a nuclear weapon for Tehran and allow Iran to sell its oil immediately upon signing.

Market sentiment has shifted dramatically over the past week amid expectations that shipping routes will reopen and Iranian exports could resume, triggering a sharp unwind of the geopolitical risk premium embedded in oil prices.

Still, uncertainty over the implementation of the agreement limited further losses. Reports showed that shipping companies are awaiting clarity on security arrangements and operating conditions, and analysts caution that a full normalization of flows could take considerably longer than markets currently anticipate.

API Inventory Shock Limits Downside

Losses on Wednesday were capped as industry data showed a sizeable decline in U.S. crude stockpiles, pointing to firm underlying demand in the world’s largest oil consumer.

The American Petroleum Institute reported that crude stockpiles dropped by 8.33 million barrels in the week ended June 12 — a much larger draw than the estimated 4.5 million barrels.

Gasoline inventories, however, rose by 2.48 million barrels, while distillate stocks — which include diesel and heating fuel — edged down by just 10,000 barrels.

The sizeable crude draw pointed to resilient demand and tighter near-term supplies in the United States.

Investors are now awaiting official U.S. government inventory data later on Wednesday for confirmation of the reported stockpile draw.