Oil Prices Drop as Hopes Rise for U.S.-Iran Nuclear Deal and Supply Concerns Mount

Global oil markets took a sharp downturn on Thursday, with prices sliding by over 3% amid rising expectations that the United States and Iran may soon reach a new nuclear agreement. Investors reacted quickly to the possibility that such a deal could ease sanctions on Tehran and allow hundreds of thousands of barrels of Iranian crude to re-enter the global market—at a time when supply anxieties are already rattling sentiment.

The Numbers: A 3% Drop

• Brent crude fell by $1.98 (3%) to $64.11 per barrel

• West Texas Intermediate (WTI) dropped $2 (3.2%) to $61.15 per barrel

The price declines came as U.S. President Donald Trump stated the two nations were “very close” to securing a nuclear agreement. An Iranian official, speaking with NBC News, confirmed Tehran’s willingness to strike a deal—so long as U.S. economic sanctions are lifted.

0.8 Million Barrels a Day on the Horizon?

According to SEB analyst Ole Hvalbye, an immediate easing of sanctions could unleash an additional 800,000 barrels per day of Iranian crude into the market—a development that would add significant weight to global supply levels and could put sustained pressure on oil prices in the near term.

This news alone would typically shake markets, but it was compounded by a surprise build in U.S. oil inventories that signaled further oversupply risks.

Unexpected Crude Inventory Build Fuels Fears

On Wednesday, the U.S. Energy Information Administration (EIA) reported that crude stockpiles increased by 3.5 million barrels, bringing the total to 441.8 million barrels. That sharply contradicted analyst forecasts, which expected a 1.1 million-barrel draw.

This unexpected build hints at weaker demand or slower refining activity—both red flags in a market already bracing for increased output.

Mixed Demand Signals: IEA and EV Sales

The International Energy Agency (IEA) added more complexity to the equation. In its latest report, the agency raised its global oil demand growth forecast for 2025 by 20,000 barrels per day to a total of 740,000 bpd, citing expectations of stronger economic activity and lower oil prices boosting consumption.

However, the IEA also forecast a significant slowdown in demand for the remainder of 2025—down to 650,000 bpd from nearly 1 million bpd growth in Q1—citing ongoing economic pressures and record-breaking electric vehicle (EV) sales as contributing factors.

OPEC+ Adds More, U.S. Growth Slows

While OPEC+ has been steadily increasing production, OPEC on Wednesday adjusted its expectations, trimming its forecast for non-OPEC supply growth, particularly from the U.S. and other independent producers. This signals potential supply-side tightening further down the road, but for now, markets are fixated on the immediate impact of a possible Iran deal and U.S. stockpile data.

What It Means for the Market

This week's developments have laid bare a core tension in global oil markets: just as long-term demand faces structural headwinds from EV adoption and energy transition, short-term geopolitical shifts can still trigger high volatility.

If a U.S.-Iran deal materializes, traders may expect a further dip in oil prices, even as OPEC+ reassesses production levels to stabilize the market.

For now, the market is reacting to the immediate headline: more oil is on the way—and demand may not be able to keep up.