Global crude oil prices fall further as U.S.-Iran peace deal eases supply fears

Global crude oil prices extended their decline on Thursday after the United States and Iran signed an interim peace agreement, easing concerns over oil supply disruptions in the Middle East and raising expectations of increased global crude exports.

Brent crude futures fell 1.12% to US$78.66 a barrel, while U.S. West Texas Intermediate (WTI) crude dropped 1.28% to US$75.81 a barrel, as traders anticipated the gradual return of Iranian oil to the global market.

The agreement includes plans to reopen the Strait of Hormuz, one of the world's most critical oil shipping routes through which nearly one-fifth of global oil supplies pass. The memorandum provides for a 60-day negotiation period and aims to restore full maritime traffic through the waterway within 30 days, significantly reducing fears of supply disruptions that had pushed oil prices sharply higher in recent months.

Market sentiment was also weighed down by a recent forecast from the International Energy Agency (IEA), which warned that the global oil market could shift into a sizeable supply surplus by 2027 if Iranian exports resume and production from other major producers continues to increase faster than demand.

Although U.S. crude inventories declined last week, indicating healthy demand, investors largely focused on expectations of stronger future supplies and easing geopolitical risks. Analysts said oil prices are likely to remain volatile as markets monitor implementation of the U.S.-Iran agreement, developments in the Middle East, OPEC+ production policy and the global economic outlook.

The latest decline follows a dramatic reversal in oil markets over the past week, with Brent and WTI retreating to their lowest levels in around three months after fears of prolonged supply disruptions in the Gulf eased. Major investment banks have also revised down their near-term oil price forecasts as the risk premium linked to the conflict continues to fade.