- Oil prices near three-month lows amid potential Iranian crude return to markets
- Brent crude holds near $79 a barrel, WTI below $77 after recent sharp declines
- US-Iran interim deal expected to allow immediate resumption of Iranian oil sales
Oil prices hovered near three-month lows on Wednesday as traders assessed the prospect of additional Iranian crude returning to global markets under a proposed US-Iran agreement aimed at reopening the Strait of Hormuz. Brent crude remained near $79 a barrel, extending a sharp retreat that has erased much of the geopolitical premium built into prices during the recent conflict. West Texas Intermediate traded below $77 a barrel after tumbling 16% over the previous four sessions, its longest losing streak of the year.
The decline comes as markets increasingly price in a revival of Iranian oil exports. An interim agreement expected to be signed on Friday would allow Tehran to resume crude sales immediately, while also laying the groundwork for broader negotiations to formally end hostilities and impose new restrictions on Iran's nuclear programme.
A draft memorandum reportedly includes commitments from Iran to ensure safe passage for merchant vessels through the Strait of Hormuz and from the US to lift restrictions that have disrupted traffic through the key shipping route.
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Before the conflict, the narrow waterway handled roughly one-fifth of global oil supplies, making any disruption a major concern for energy markets.
The agreement is also expected to include waivers covering Iranian crude exports and related services such as shipping, insurance and banking, potentially easing barriers that have constrained supply for years.
Despite the growing optimism around increased supply, some market fundamentals remain supportive of prices. Industry estimates released this week suggested US crude inventories fell by 8.3 million barrels last week, including a significant drawdown at the storage hub in Cushing, Oklahoma. Official government data due later on Wednesday will provide a clearer picture of stockpile trends.
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