U.S.-Iran peace deal sparks fears of oil supply glut

ME News reports that on July 4 (UTC+8), as the U.S.-Iran peace agreement released a surge of supply, oil prices plummeted across the board amid weak demand, reigniting concerns about a global crude oil surplus. This represents a dramatic reversal: less than three months ago, global benchmark crude prices hit record highs; just weeks prior, senior industry executives warned that global inventories had fallen to critically low levels due to the Iran crisis. In addition to the immediate impact of the Strait’s reopening, analysts from institutions including Morgan Stanley and Goldman Sachs warned this week that the market faces a risk of oversupply next year. Kit Haines, Head of Oil Research at energy consultancy Energy Aspects, stated, “The overwhelming sentiment in the market right now is bearish.” Even before the U.S.-Iran memorandum of understanding to reopen the Strait of Hormuz was signed in mid-June, suppliers in the Persian Gulf had already begun increasing shipments. In the weeks following the agreement, over 60 million barrels of crude oil—trapped due to the outbreak of war—flooded into the market. (Jin10) (Source: ODAILY)