Brent falls to $77.41 as Iran sanctions relief eases UK curve

Brent crude futures fell $2.14, or 2.69%, to $77.41 a barrel as of 0616 GMT, the lowest level since 2 March. West Texas Intermediate (WTI) dropped $2.36, or 3.07%, to $74.43, its weakest since 4 March. Reuters reported that the sell-off followed a 14-point agreement between Washington and Tehran aimed at ending the conflict, reopening the strait, and lifting US sanctions on Iranian exports.

The deal opens a 60-day negotiation phase in which Iran will allow free passage through the Strait of Hormuz, a route carrying roughly a fifth of global oil flows, with full traffic restoration expected within 30 days. The Financial Times noted the preliminary terms defer harder talks on Iran's nuclear programme and commit the US and its allies to a $300 billion recovery plan for Iran. IG analyst Tony Sycamore said energy markets adjusted to a 'quicker-than-anticipated influx of Iranian oil'.

The chart below shows Brent over recent months, against which the latest drop to $77.41 can be read.

What this means for UK buyers

Lower crude feeds through to UK gas and power forward curves, which take their cue from oil-linked sentiment and global LNG pricing. For buyers sitting on renewals, a softer crude backdrop eases the upward pressure that has shaped the curve since the strikes. The caution is that the move rests on a deal that is not yet enacted, so the discount could reverse quickly if talks stall.

Watch these factors over the coming weeks:

• Brent front-month (currently $77.41 a barrel)
• Strait of Hormuz traffic restoration (30-day target)
• The 60-day US-Iran negotiation window
• US Federal Reserve rate signals (nine of 19 policymakers now favour a hike)
• IEA 2027 oversupply forecast of 5.05 million barrels per day

Analysts remain cautious on further falls. Bloomberg reported that supply may stay constrained even after the strait reopens. Mukesh Sahdev of XAnalysts said the volume of crude returning could be limited, as some shipments have already bypassed standard routes and shipowners may hesitate to send tankers back over fears the agreement could fail. He added that demand may outpace supply before prices return to pre-war levels.

The longer-term picture points the other way. S&P Global Platts noted that a working deal could turn this year's supply crisis into a sizeable glut, with the IEA warning on Wednesday that supply could exceed demand by 5.05 million barrels per day next year. Watch the strait reopening timeline and the 60-day talks: if both hold, the curve has room to soften further; if either slips, expect the discount to unwind fast.