Global crude oil markets saw a broad selloff on Wednesday, June 17, with futures for Brent crude due for August delivery dipping nearly 1% to $78.24 a barrel. This extended declines by about 5% over the previous two days and marked the lowest price since March 3. US benchmark West Texas Intermediate (WTI) crude traded at $75.34 per barrel, down 0.93%, while Brent international benchmark slipped 0.68% to $78.42. The Murban Gulf oil benchmark remained flat at $71.81. This overall decline marked a significant reversal, as oil prices had risen by over 50% during the recent conflict.
The decline was fueled by increasing hopes for the reopening of the Strait of Hormuz and reports of Iranian supertankers transiting a US Navy counter-blockade. Specifically, at least three National Iranian Tanker Company (NITC) vessels, including the Diona and Hero 2 (carrying a combined 3.8 million barrels) and the Sonia I (with 1 million barrels), exited the US blockade zone. Energy traders viewed these movements as confidence signals, anticipating a return of Middle Eastern supply to global markets. The selloff was also driven by expectations that Washington and Tehran are moving towards a formal interim agreement that could ease sanctions on Iranian oil exports and allow millions of barrels of Iranian crude from storage to return to the market.
Energy markets are pricing in the possibility of increased supply and also responding to signs of softer global demand, particularly in Asia, where refinery runs have slowed. Analysts note this combination of improving supply expectations and weakening demand is amplifying the price decline. The International Energy Agency (IEA) in its June Oil Market Report projected global oil supply to rise from 102.4 million barrels per day in 2026 to 110.3 million barrels per day in 2027, compared with expected demand of 105.3 million barrels per day, signaling a potential surplus by next year. This projection includes significant output growth from the United Arab Emirates, which formally left OPEC on May 1, 2026, allowing it to ramp up production beyond previous cartel quotas.
Despite the positive signals, the founder of Vanda Insights, Vandana Hari, warned that while the announcement of the US and Iran's Memorandum of Understanding (MoU) brought relief, delivering on pledges and promises would be the "hardest part." She noted that the market might be "front-running" the reopening of the Strait of Hormuz and potentially not adequately factoring in hiccups related to logistics or renewed geopolitical tensions. Stephen Cotton, general-secretary of the International Transport Workers' Federation, also stated that a realistic return to normal shipping patterns could take weeks, if not months, due to stranded vessels and the need for crew changes, even with the expected signing of the agreement in Geneva on Friday, June 19.
