Oil falls below $75 for first time since Iran war as US and Iran sign peace deal
By Aboki Forex —
Brent crude futures dropped below $75 per barrel on Wednesday for the first time since the Iran war began. The international benchmark slid roughly 4.4% to trade below $74.
The decline followed a peace agreement between the US and Iran last week. The deal aims to end the conflict and reopen the Strait of Hormuz. Both sides promised safe passage for oil tankers and other vessels. Some shipping lines are waiting to see if the ceasefire holds before resuming transits.
US benchmark WTI crude also fell 4.4% to trade near $71 on Wednesday morning. The drop adds to a 27% loss over the past month as peace talks advanced.
Why did prices fall below $75? The International Energy Agency now expects a global oil surplus by 2027. Major banks have cut their price forecasts. JPMorgan lowered its Brent target to $86 for the third quarter and $80 for the fourth quarter.
Analysts warn that low storage levels could still push prices higher. OECD countries have used strategic reserves to keep prices stable. Storage levels are far lower than before the war. At the Cushing, Oklahoma terminal, volumes have fallen to about 19 million barrels. That is the lowest since the Permian Basin explosion in the mid-2010s.
Experts say drawdowns in international reserves may force prices up again before the global oil system can move crude in large volumes.