Brent holds at $78.81 as US-Iran deal eases Hormuz risk premium

Oil barely moved on Wednesday after two days of heavy selling. By 0630 GMT, Brent crude futures had fallen 15 cents to $78.81 a barrel and US West Texas Intermediate (WTI) eased 12 cents to $75.93, both down around 0.2%. That follows declines of roughly 5% in each of the previous two sessions, taking both benchmarks to three-month lows on optimism that a US-Iran agreement would restart shipments through the Strait of Hormuz.

The driver is a draft US-Iran arrangement. Under the framework, Washington would lift its blockade of Iran's ports while Tehran permits tanker traffic through Hormuz, which has been largely closed since US and Israeli strikes on 28 February. The BBC reported that oil fell and equities rose after the deal was announced. Reuters noted that traders are stripping out the geopolitical risk premium, though physical tanker flows have yet to recover. The Financial Times framed the framework as paving the way to reopen the Strait, the conduit for roughly 20% of global crude and liquefied natural gas (LNG) before the closure.

The chart below shows Brent over recent months, against which the latest easing and the draining risk premium can be read.

What this means for UK buyers

For UK commercial energy buyers, the read-through runs through gas. Hormuz is a major LNG route, and a credible reopening loosens the global gas balance that feeds National Balancing Point (NBP) pricing and, in turn, UK power. A softer oil and gas complex is supportive for renewals, but the move is fragile and could reverse on any breakdown in the pact.

Watch the points that will decide whether this holds:

• The interim memorandum of understanding, still unreleased, extending the April ceasefire by 60 days
• Israel's position, having distanced itself from both the April ceasefire and the latest agreement
• The pace of physical tanker traffic returning through the Strait
• US Energy Information Administration (EIA) inventory data due Wednesday
• WTI's expected trading band of roughly $10 either side of $80 a barrel

The demand picture adds context. China's crude throughput fell 9.1% year-on-year in May to its lowest in nearly four years, suggesting refiners are drawing down stockpiles. The American Petroleum Institute reported US crude inventories down 8.3 million barrels in the week to 12 June, well beyond the 4.6 million barrel decline expected.

The near-term direction now rests on detail rather than headlines. If the memorandum lands and tankers move, the risk premium continues to drain and the curve softens further; if Israel's distance unsettles the ceasefire, expect the premium back in within sessions. Buyers holding flexible contracts have room to wait for the EIA print and the published terms before committing.