Brent crude prices fell by $1.19, or 1.48%, to $79.38 a barrel by 0416 GMT on Monday, June 22nd, after US-Iran talks concluded in Switzerland. Earlier in the day, Brent crude had climbed to $82.30 due to initial concerns about threats from US President Donald Trump and Iran's announcement of closing the Strait of Hormuz. West Texas Intermediate (WTI) crude also saw a decline, with the more-active August contract losing $0.56 to $75.29 a barrel, while the expiring July contract was up $0.40 at $77.00 a barrel.
The decline in oil prices was primarily driven by improving prospects for a diplomatic breakthrough between the United States and Iran, according to Sugandha Sachdeva, founder of SS WealthStreet. High-ranking US and Iranian officials wrapped up their first round of talks, which began on Sunday, under a memorandum of understanding to extend a ceasefire for at least another 60 days. Iranian Foreign Minister Abbas Araqchi stated that Iran had secured waivers for oil and petrochemical exports, the release of some frozen assets, and the launch of a reconstruction and development plan.
This development is significant as it could allow nearly 1.5 million barrels per day of Iranian crude to return to international markets, substantially improving global supply availability at a time when demand growth remains moderate, Sachdeva noted. UBS analyst Giovanni Staunovo also commented that progress in the talks was likely the main factor weighing on oil prices. Over 25 million barrels of Iranian oil have already passed through the virtual blockade line since Monday, according to the head of the National Iranian Oil Company.
In addition to Iranian supply, Iraq plans to gradually restore crude production to between 4.2 million and 4.3 million barrels per day. ANZ expects around 2 million to 3 million barrels per day to be restored in the first four weeks, with a further 2 million to 3.5 million barrels per day potentially recoverable in the third quarter of 2026, subject to stability. Sellers of Iranian crude to China have already slashed prices, offering spot cargoes of Iranian Light crude for July arrival at a discount of $2.50 to $5 a barrel to Brent benchmark prices, compared to a $1 discount before the deal.
