Oil rises 1% on US-Iran deal doubts; IEA warns of supply glut
NEW YORK - Oil prices rose more than 1% Wednesday after U.S. President Donald Trump said the new ceasefire agreement with Iran was not final and the Iran war could resume if he is unsatisfied, but concerns over excess supply next year limited the gains.
Brent crude futures were up 89 cents, or around 1.1%, at $79.85 a barrel at 11:34 a.m. ET (1534 GMT), and U.S. West Texas Intermediate gained 91 cents, or 1.2%, to $76.96. Both contracts hit their lowest since early March earlier in the session.
Trump said on Wednesday that a memorandum of understanding with Iran was not final, and that he could resume a bombing campaign if he did not like it or if Iran did not "behave".
"(There's) still a bit of uncertainty in terms of the U.S. situation ... (it) makes sense for oil to bounce back from these levels after staging what has been quite a sharp decline in the last few days," said Fawad Razaqzada, market analyst at City Index and FOREX.com.
There were fresh Israeli air strikes and artillery fire in several southern towns of Lebanon throughout Wednesday. Lebanese security sources said Hezbollah had also launched two drone attacks on Israeli forces in the south.
The memorandum, signed on Sunday, calls for a halt to hostilities between Israel and the Iran-backed Hezbollah group in Lebanon.
On the supply side, U.S. crude oil inventories fell for a tenth straight week last week as demand surged, pushing total stockpiles to their lowest level since 1985 as the Iran war continues to upend global energy markets, the U.S. Energy Information Administration said on Wednesday. [EIA/S]
"The U.S. and the rest of the world continue to draw down strategic inventory reserves as well as commercial inventories in an attempt to mitigate the disruption in the Middle East," said Andy Lipow, president of Lipow Oil Associates.
However, a supply glut looms on the horizon. In its first look at 2027, the IEA said the oil market will enter a significant supply overhang, with global supply set to surge by 8 million barrels per day and demand rising by just 2 million bpd.
In the near term, the agency said the Iran-U.S. deal should provide an opportunity to replenish depleted inventories or build new strategic reserves.
"Markets may be underpricing the depth of the supply glut coming online," said Crispus Nyaga, research analyst at Empire FX.
Still, industry officials say a full return to pre-war production and refining levels is likely to take weeks, months or even years.
(Additional reporting by Laila Kearney in New York, Ahmad Ghaddar in London, Anushree Mukherjee in Bangalore, Yuka Obayashi in Tokyo and Jeslyn Lerh in Singapore. Editing by Alexander Smith, Kirsten Donovan, Mark Potter and Nia Williams)
Copyright Reuters or USA Today Network via Reuters Connect.
This story was originally published June 17, 2026 at 12:02 PM.