Oil prices dropped significantly on Thursday amid growing speculation that a potential nuclear agreement between the United States and Iran could boost global crude supply.
As of 04:05 ET (08:05 GMT), Brent crude futures had fallen 3.1% to $64.06 per barrel, while U.S. West Texas Intermediate (WTI) crude futures declined 3.3% to $61.06 per barrel. This marked the second consecutive day of losses for both benchmarks, following a four-day winning streak that had taken them to a two-week high.
Trump Signals Progress on Iran Deal
President Donald Trump announced Thursday that the U.S. was nearing a breakthrough nuclear deal with Iran, adding that Tehran had “sort of” accepted the proposed terms. “We’re in very serious negotiations with Iran for long-term peace,” Trump said during his Gulf visit, according to AFP.
Although recent U.S.-Iran discussions ended without a final agreement, more talks are planned. Previously, Iran had insisted on continuing uranium enrichment, a sticking point for the U.S.
However, NBC News reported that Iran may now be willing to finalize a deal if all sanctions are lifted, quoting Ali Shamkhani, a senior adviser to Iran’s Supreme Leader Ayatollah Ali Khamenei.
Should a deal be reached and sanctions lifted, Iran could rapidly increase oil exports, potentially altering the current supply-demand balance in global energy markets. Before U.S. sanctions were reinstated in 2018, Iran was producing around 3.8 million barrels per day. Currently, its exports hover near 1.6 million bpd.
IEA Trims Oil Demand Forecast
Adding to market concerns, the International Energy Agency (IEA) cut its oil demand growth forecast for the remainder of 2025 to 650,000 barrels per day, citing global economic challenges and surging electric vehicle sales. This is a significant reduction from the 990,000 bpd demand growth recorded in Q1 2025.
“Rising trade uncertainty is expected to drag down global economic performance and, in turn, curb oil consumption,” the IEA stated in its latest report.
Surprise U.S. Inventory Build
In the U.S., government data showed a surprising build in crude inventories. The Energy Information Administration reported a 3.5 million barrel increase in stockpiles for the week ending May 9, bringing total inventories to 441.8 million barrels — contrary to expectations for a 2 million barrel draw.
This followed industry data from the American Petroleum Institute, which also reported a 4.3 million barrel rise in stockpiles.
OPEC+ Supply Outlook
Meanwhile, OPEC+ continues to ramp up production. Analysts at ING noted that the market is awaiting the group’s June 1 decision on output targets for July. They added that while President Trump may favor increased supply to help lower oil prices, he must also consider the downside risk to U.S. shale producers, who may cut drilling if prices fall too far.
