US Iran MOU Oil Sanctions Waived, Crude Prices Drop

US Iran MOU – (Web Desk) – Oil prices dropped in early trading on Thursday after the US Iran MOU oil sanctions waived agreement came into effect, opening the door for Iranian crude to return to global markets. The deal also includes plans to reopen the Strait of Hormuz, the world’s most critical oil shipping lane.

Brent crude fell 89 cents to $78.66 a barrel, while US West Texas Intermediate dropped 98 cents to $75.81 a barrel. Both benchmarks extended losses seen earlier in the week.

Markets had briefly recovered on Wednesday after President Donald Trump hinted he could restart military action if Iran failed to follow through on the deal. But those gains quickly faded.

IG market analyst Tony Sycamore explained the drop simply. Energy markets are aggressively pricing in a faster return of Iranian oil barrels following the new memorandum of understanding between Washington and Tehran.

The MOU covers 14 key points and opens a 60-day negotiation window. During this period, Iran will allow free passage through the Strait of Hormuz. Full shipping traffic is expected to be restored within 30 days.

The agreement does leave some tough issues for later, including Iran’s nuclear programme. It also requires the US and its partners to build a $300 billion recovery plan for Iran.

The International Energy Agency warned on Wednesday that if the deal holds and the strait fully reopens, a global oil supply glut could form by 2027. It forecast supply will exceed demand by over 5 million barrels per day next year.

Adding more pressure on oil prices, the US Federal Reserve is now weighing possible interest rate hikes later this year. Nine out of 19 Fed policymakers now support a rate increase, a sharp shift from three months ago when none did.