Oil prices fall 3% on Trump's Iran deal optimism, reversing recent gains as a potential return of Iranian supply looms.
WTI crude fell to $62.30 as Trump's comments revived hopes for an Iran nuclear agreement, which would relax sanctions and boost global supply. The selloff accelerated after reports that indirect negotiations had made progress, draining the geopolitical risk bid that had pushed oil above $65 last week.
The immediate bearish move targets support at $61.50, with a break below opening the path to the May low of $60.20. Any headline suggesting a final deal could push WTI below $60 as supply concerns mount.
Short-term traders may look to sell rallies, but the timeline for a deal remains uncertain. A breakdown in talks could spur a quick reversal. Positions should be sized carefully given the headline-driven volatility.
Oil prices dropped sharply on Monday after Donald Trump expressed confidence in reaching a new nuclear agreement with Tehran, raising the possibility of eased sanctions and a return of Iranian barrels. The development erased supply risk premiums that had built up amid US-Iran tensions. Broader markets remained quiet as investors balanced geopolitical repricing against macro uncertainties.
A nuclear deal would likely lead to the removal of U.S. sanctions on Iranian oil exports, allowing Tehran to bring back significant supply to a market that has been relying on OPEC+ cuts. The mere prospect of additional barrels removes the supply scarcity premium that has supported prices.
Estimates suggest Iran could increase exports by 500,000 to 1.5 million barrels per day within months of sanctions relief, depending on storage levels and production capacity. That would represent roughly 1-2% of global supply.