Oil Prices Tumbles as Iran Deal Unlocks Millions of Barrels for Global Markets

TLDR

• Oil prices dropped over 3% Monday and continued falling Tuesday after U.S.-Iran peace talks progressed
• The U.S. issued a 60-day sanctions waiver allowing Iran to sell crude oil globally
• Tankers resumed sailing through the Strait of Hormuz after months of disruption
• U.S. Strategic Petroleum Reserve hit its lowest level since June 1983
• Brent crude fell to around $76.76, down from highs above $120 during peak conflict

The U.S. granted Iran a 60-day sanctions waiver following peace talks, easing oil supply fears and pushing crude prices lower for a second straight day.

Why Oil Prices Are Dropping

Oil prices fell sharply on Monday and continued lower on Tuesday after the United States issued a 60-day general license allowing Iran to sell crude oil and petroleum products globally.

Brent crude fell around 1.5% to $76.76 per barrel. West Texas Intermediate slipped 1.3% to $72.88 per barrel.

The waiver covers not just oil sales but also related banking, insurance, and shipping services. That opens up new markets for Iranian crude, including potentially the United States itself.

Oil had surged above $120 per barrel at the height of the conflict when shipping through the Strait of Hormuz was severely disrupted.

Hormuz Traffic Slowly Recovering

The Strait of Hormuz is a chokepoint for roughly one-fifth of the world’s oil and liquefied natural gas supplies. It had been closed for more than three months due to the conflict.

Tankers began moving through the strait again on Monday. Two smaller crude tankers carrying just under 2 million barrels sailed out into the Gulf of Oman, according to MarineTraffic data.

However, analysts warned the recovery would not be instant. Ship owners want confirmation that mines have been fully cleared. Damaged ports, debris, and congestion remain obstacles.

Strategic Reserve at 43-Year Low

U.S. crude stocks in the Strategic Petroleum Reserve dropped to 331.2 million barrels last week. That is the lowest level since June 1983.

The drawdown reflects how tightly supply was squeezed during the conflict. Iranian officials described recent talks as achieving “major progress,” with a final deal expected within 60 days.

Saxo Bank analyst Ole Hansen noted that the sanctions waiver shifts the market’s attention squarely to supply. More Iranian barrels entering the market is now the dominant price driver.

Analysts in a Reuters poll also expect U.S. crude inventories to have fallen last week, adding further context to a market adjusting quickly to a shifting geopolitical picture.

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