Oil prices edged lower on Wednesday, extending the previous session's decline as investors weighed a peace deal between the U.S. and Iran, though uncertainty over the full resumption of shipping through the Strait of Hormuz limited further losses, Reuters reports, according to UNN.
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Brent crude futures fell 16 cents, or 0.2%, to $78.80 a barrel by 03:40 GMT (07:30 Kyiv time), while U.S. West Texas Intermediate crude fell 25 cents, or 0.3%, to $75.80 a barrel.
Both benchmarks posted declines of about 5% for the second consecutive session on Tuesday, hitting three-month lows amid hopes that a deal between the U.S. and Iran would allow oil shipments through the strait.
"Markets are largely pricing out the geopolitical risk premium previously embedded in oil prices," said Priyanka Sachdeva, senior market analyst at Phillip Nova.
"However, the path to normalization remains far from straightforward. While political agreements may be progressing, the physical movement of tankers through the strait has not yet fully recovered," she noted.
The deal involves the United States lifting the blockade of Iranian ports, while Tehran will allow the movement of oil tankers through the strait, which was effectively blocked following U.S. and Israeli strikes on February 28.
"Oil markets declined on expectations of the Strait of Hormuz opening following the peace deal, but traders held back from further selling pending details," said Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment.
He added that the WTI price is likely to remain volatile in a range of $10 above or below $80 per barrel.
Before the closure of the strait, approximately one-fifth of the world's oil and LNG supplies passed through it.
Details of the interim peace deal began to emerge on Tuesday: U.S. President Donald Trump stated it excludes nuclear weapons for Tehran, and a U.S. official said Iran would be able to sell oil once the deal is signed.
The Memorandum of Understanding, which has not yet been made public, extends a fragile truce agreed upon in April for another 60 days to allow for negotiations on a permanent ceasefire.
However, industry officials say a full return to pre-war levels of production and refining is likely to take weeks, months, or even years.
Oil supplies after the deal with Iran may return to normal only in a few months - AP15.06.26, 14:57
Israel has distanced itself from both the April ceasefire agreement and the latest U.S.-Iranian deal, adding to uncertainty regarding compliance.
According to the Lebanese National News Agency, Israeli drones struck three vehicles in southern Lebanon on Tuesday, killing at least four people and wounding several others, drawing a rare public condemnation from Trump.
Data shows that China's oil refinery throughput in May fell 9.1% compared to the same period last year, reaching its lowest level in nearly four years, also indicating that refineries have begun using inventories amid the war with Iran.
According to the American Petroleum Institute, U.S. crude inventories fell by 8.3 million barrels for the week ending June 12. The drawdown exceeded expectations, which had predicted a 4.6 million barrel decrease.