Oil prices fluctuate as US-Iran deal nears

• Crude oil prices remain pressured as an impending US-Iran interim peace deal threatens to increase global supply by reopening the Strait of Hormuz.
• Market gauges are reflecting a bearish outlook, with key timespreads moving into a contango structure that indicates anticipated oversupply.
• The potential supply boost from Iran and the release of stalled oil shipments are weighing heavily on global energy price expectations.

West Texas Intermediate traded near $77 a barrel on Wednesday as markets reacted to a potential interim peace agreement between the United States and Iran that could allow Tehran to resume oil sales immediately.

This development follows two days of sharp declines for crude, as traders weigh the impact of an agreement that could bring significant new volumes of oil back onto the global market.

The proposed 14-point memorandum for the deal, which is set to be signed on Friday, outlines 60 days of talks aimed at ending the war and establishing new limits on Iran’s nuclear program.

Shipowners are already preparing for the potential reopening of the Strait of Hormuz, an event that could release more than 100 laden ships currently trapped inside the Gulf.

The prospect of increased supply has contributed to a price decline of almost 40% from the peak levels observed during the conflict that began in late February.

While supply concerns dominate market sentiment, official data expected later on Wednesday will clarify whether US crude inventories continue their recent trend of rapid depletion.