Macquarie warns a pre-midterms US-Iran deal could flood oil markets with Iranian exports, risking a surplus that drives prices sharply lower.
Macquarie analysts warn that a US-Iran agreement before the midterms could lift sanctions, releasing up to 1 million barrels per day of Iranian crude. This supply surge threatens to overwhelm demand growth, sending WTI toward $55 a barrel from current levels near $60.
Macquarie sees WTI sliding toward $55 a barrel, representing a drop of roughly 8-10% from current levels around $60.
Analysts estimate that Iran could add up to 1 million barrels per day of exports within a few months of sanctions relief, significantly swelling global supply.
Negotiations are accelerating with the US midterm elections in November as a deadline, as the administration seeks to secure a deal that could lower gasoline prices for voters.
Brent crude faces similar downside risk as WTI from a potential US-Iran deal; Macquarie sees the global benchmark dropping in tandem with WTI, as returning Iranian barrels weigh on the international market. The surplus risk may push Brent below $60.
Brent would likely fall in sympathy with WTI, as the global supply increase from Iran adds to existing demand concerns. Macquarie’s bearish scenario sees Brent slipping below $60.
Macquarie warns that even without a deal, the market is finely balanced, but an additional 1 million b/d from Iran would tip it into a notable surplus in the second half of 2026.
Macquarie analysts caution that a US-Iran nuclear accord before November’s midterm elections may lift sanctions on Iranian crude, adding up to 1 million barrels per day to global supply. The influx threatens to swamp the market, driving global inventories higher and pushing oil prices lower. The bank projects West Texas Intermediate could slide toward $55 a barrel, deepening losses as demand growth slows.
Macquarie sees a bearish scenario where a deal lifts sanctions on Iranian exports, leading to a supply surplus and pushing WTI toward $55 a barrel. The bank's base case assumes no deal, but the risk is skewed to the downside.
The Biden administration faces pressure to lower fuel costs for voters ahead of the November elections. A diplomatic resolution with Iran that returns barrels to the market could help cap gasoline prices.