Global oil prices experienced a sharp decline on Thursday, dropping to their lowest levels since the outbreak of the conflict between the United States and Iran. The drop followed the signing of an interim agreement between the two nations, which has significantly improved the prospects for global crude supply and eased widespread market anxieties.
According to market data, Brent crude futures declined by $1.53, representing a 1.9 per cent drop, to settle at $78.02 per barrel. Concurrently, the United States West Texas Intermediate crude fell by $2.22, or 2.9 per cent, to close at $74.57 per barrel. With these movements, Brent crude touched its lowest value since the initial trading session that followed the first US-Israeli military strikes on Iran, while the West Texas Intermediate benchmark plummeted to its weakest level recorded since early March.
Market sentiment was heavily driven by widespread expectations of an increase in Iranian oil exports after Washington and Tehran signed a 14-point memorandum of understanding aimed at de-escalating regional tensions. Commenting on the market reaction, IG market analyst Tony Sycamore stated, “The selloff extended as energy markets continued to aggressively price in a faster-than-expected return of Iranian barrels following the recent U.S.-Iran memorandum of understanding,”
The newly enacted agreement initiates a 60-day negotiation window during which Iran will permit toll-free passage for maritime vessels through the Strait of Hormuz, which remains one of the most critical oil and gas shipping corridors globally. The framework also outlines a plan to restore naval traffic through the strategic waterway to its full operational capacity within 30 days. Industry analysts anticipate a gradual recovery in crude oil flows through the channel, although energy specialists have cautioned that prices are unlikely to collapse drastically because global demand remains highly resilient and commercial inventories require urgent replenishment.
In its assessment, investment bank Goldman Sachs projected that oil exports from the Gulf region will return to pre-conflict baselines by the end of July, with aggregate crude production expected to recover completely by October. The financial institution estimated that the normalisation process could add approximately 13 million barrels per day to the shipping flows through the Strait of Hormuz, effectively restoring total transit volumes to roughly 70 per cent of pre-war capacities.
Conversely, banking group BNP Paribas noted that it does not expect crude oil prices to fall back entirely to pre-conflict baselines. The bank specified that it views $75 per barrel as a “durable floor for the foreseeable future,” pointing to persistent long-term supply constraints and firm global demand as factors that will prevent further significant price drops.
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