Key Points
- Brent drops below $77
- Iran waiver lasts 60 days
- Supply outlook improves
- Market eyes August deadline
ISLAMABAD: Global oil prices continued to fall on Tuesday as investors focused on the prospect of additional Iranian crude returning to international markets following a 60-day US sanctions waiver and a diplomatic roadmap agreed between Washington and Tehran.
Brent crude fell more than 1 per cent to around $76.8 per barrel, extending losses from the previous session when it settled below $78.
US West Texas Intermediate (WTI) dropped to about $73 per barrel. Traders continued to unwind the geopolitical risk premium that had driven prices sharply higher during the recent conflict, according to Reuters.
The latest selloff follows a US decision to suspend sanctions on Iranian oil exports for 60 days, beginning June 22.
The US allowing Tehran to sell crude and receive payments under a broader diplomatic framework negotiated in Switzerland with mediation from Pakistan and Qatar further strengthened supply sentiment.
The talks also produced a 60-day roadmap aimed at reaching a more comprehensive agreement.
Markets have interpreted the move as a signal that Iranian barrels could return more freely to global supply chains over the coming weeks.
Analysts said the combination of sanctions relief, improving tanker traffic through the Strait of Hormuz and reduced fears of a conflict escalation has shifted attention from supply disruptions to potential supply growth.
The decline marks a continuation of a broader reversal that began after details of the interim US-Iran understanding emerged earlier this month.
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Since then, investment banks and market analysts have lowered oil price forecasts as concerns over shortages gave way to expectations of increased availability from the Middle East.
Shipping activity through the Strait of Hormuz has also shown signs of recovery.
Tanker movements increased this week, easing fears that one of the world’s most important energy chokepoints could remain severely disrupted.
The reopening of flows has further weakened the supply-risk narrative that dominated markets during the conflict.
Iranian exports, which remained constrained by sanctions and wartime disruptions, are already showing signs of recovery.
Market participants said the release of previously blocked volumes and expectations of additional shipments are contributing to bearish sentiment
Despite the recent selloff, analysts caution that the market remains sensitive to political developments.
Deep mistrust between Washington and Tehran persists, and any setback in negotiations could quickly revive concerns over regional stability and energy supplies.
Oil outlook: next 60 days
The outlook for the next two months will largely depend on whether the sanctions waiver remains in place through its August 21 expiry date and whether negotiators can convert the current roadmap into a lasting agreement.
If talks continue to progress and Iranian exports increase steadily, oil prices could remain under pressure as traders price in additional supply.
Further normalisation of shipping through the Strait of Hormuz would reinforce that trend.
However, analysts note that a full restoration of Iranian exports and regional energy flows will take time.
Any breakdown in negotiations, renewed threats to shipping, or reimposition of sanctions could reverse the recent decline and reintroduce a geopolitical premium into crude markets.
For now, the market’s focus has shifted from fears of supply disruptions to expectations that more Iranian oil could reach global buyers before the 60-day waiver expires, keeping downward pressure on prices.
Oil prices recent trajectory
Oil prices have recently moved on a volatile trajectory, swinging between gains and losses amid shifting expectations over global supply, particularly OPEC+ production decisions and potential increases in Iranian crude exports.
Demand concerns linked to slowing economic growth in major economies have also added pressure, keeping prices broadly range-bound.
