DTN Oil Update
Oil Futures Hit Nearly 2-Month Low on US-Iran Ceasefire Deal
HOUSTON (DTN) -- Oil futures fell more than 4% on Monday to their lowest level in nearly two months, after the United States and Iran announced over the weekend that they had reached an initial agreement to end hostilities and reopen the Strait of Hormuz.
The NYMEX WTI crude futures contract dropped $3.78, or 4.45% to 81.10 bbl, the lowest level since April 17 when it was at $81.02 bbl, according to DTN data. August ICE Brent declined by $3.80, or 4.35% to $83.53 bbls.
The front-month NYMEX ULSD futures edged down $0.1294 to $3.2750 gallon, and the NYMEX RBOB futures contract plummeted $0.0932 to $2.9566 gallon.
The U.S. Dollar Index softened 0.271 points to 99.474 against a basket of foreign currencies.
U.S. President Donald Trump said on Sunday that a deal with Iran was effectively complete and would lead to the reopening of the Strait of Hormuz and the lifting of the U.S. blockade on Iranian maritime trade. However, Trump later clarified that shipping would resume after both sides formally sign the agreement on Friday, June 19, in Switzerland. The Islamabad-mediated memorandum also extends the ceasefire by 60 days to allow further negotiations on Iran's nuclear program and sanctions relief.
Despite the announcement, Israel continued hostilities against Lebanon, adding to regional uncertainty, while hundreds of oil tankers remained idle in the Persian Gulf as shippers awaited clarity on when safe passage through the Strait of Hormuz would restart. The three-and-a-half-month disruption, which removed nearly one-fifth of global petroleum liquid supplies from the market, has driven oil prices higher and reduced inventories to their lowest levels in a decade.
Iranian media reported that Tehran has up to 30 days to reopen the Strait, making the timeline critical as global stockpiles continue to shrink.
The International Energy Agency has warned that inventories could reach a "red zone" by July or August if traffic at the Strait of Hormuz is not restored. While markets could see immediate relief once shipments resume, oil production is expected to recover only gradually due to infrastructure damage, tanker shortages, and slow field restarts.
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