Khaberni - Oil prices increased by more than 1%, on Wednesday, after U.S. President Donald Trump threatened to resume bombing Iran unless they "behaved properly", although they are still close to their lowest levels in 3 months, as the International Energy Agency warned of a surplus in supply next year.
According to Reuters, Brent crude futures rose 93 cents, or 1.2%, to $79.89 a barrel by 17:08 Abu Dhabi time, while West Texas Intermediate rose 79 cents or 1% to $76.84 a barrel. Both contracts had touched their lowest levels since early March earlier in the session.
On Wednesday, Trump said that the memorandum of understanding with Iran is not final and that he may resume the bombing campaign if he does not like the situation or if they do not "behave properly", referring to Iran.
Market analyst at City Index and Forex.com, Fouad Razakzadeh, said that there is still some uncertainty about the situation in the United States, so it makes sense for oil to rebound from these levels after a sharp decline seen in the past few days.
The International Energy Agency said in its first forecast for 2027 that the oil market will experience a significant surplus in supply, with global production expected to increase by about 8 million barrels per day, while demand will only increase by two million barrels per day.
In the short term, the Agency added that the Tehran and Washington agreement opens the way for replenishing depleted stocks or building new strategic reserves.
Research analyst at Empire FX, Crispus Nyaga, said: "There might be an insufficient appreciation in the markets for the depth of the supply surplus we are facing."
The memorandum of understanding, which has not yet published details, extends the fragile ceasefire announced in April for another 60 days to allow both parties to negotiate a permanent cessation of the war.
However, energy sector officials estimated that the full return to pre-war production and refining levels could take weeks, months, or even years.
Sources, citing a report from the American Petroleum Institute, stated that U.S. crude oil inventories declined by 8.3 million barrels in the week ending June 12.
This drop exceeded expectations, which had indicated a decrease of 4.6 million barrels. The official numbers from the Energy Information Administration are scheduled to be released later today.
