West Texas Intermediate (WTI) crude oil prices dropped to $77.77 per barrel on Tuesday, marking their lowest level since early March, as optimism grew regarding the potential reopening of the key Strait of Hormuz following emerging details of a US-Iran deal [1]. Over the past four weeks, WTI has depreciated nearly 25% [1]. US President Donald Trump, speaking at the G7 summit, stated that the peace deal with Iran is entering a 'second stage,' which he believes will be easier, and indicated plans to meet with leaders from Qatar and the United Arab Emirates during the summit [1]. Trump also described the war in Lebanon as 'a minor one' and not expected to hinder lasting peace in Iran [1].
According to the Israeli newspaper Hareetz, as cited in the article, the deal reportedly includes the release of approximately $24 billion in frozen Iranian assets in exchange for a toll-free reopening of the Strait of Hormuz [1]. Iran’s Deputy Foreign Minister, Takht Ravanchi, noted that nuclear issues, including stockpiles, uranium enrichment, and Iran’s nuclear needs, will be addressed in the next phase of negotiations [1].
On the supply side, the American Petroleum Institute (API) is expected to release its weekly Crude Oil Stock report later in the day, which is anticipated to show a slowdown in the depletion of US stockpiles, with crude stocks projected to decline by 4.5 million barrels for the week of June 5, following a 9.1 million-barrel drop the previous week [1]. Despite this, commercial oil reserves have been consistently decreasing since mid-April, raising concerns about a potential oil shortage [1].
CONCLUSION
WTI oil prices have sharply declined to three-month lows amid hopes for a reopening of the Strait of Hormuz and progress in US-Iran negotiations. While the anticipated release of frozen Iranian assets and easing geopolitical tensions are weighing on prices, ongoing declines in US oil reserves continue to raise supply concerns.