U.S.-Iran peace accord fuels fears of an oil supply glut

ME News reported that on July 4 (UTC+8), oil prices tumbled broadly as the U.S.-Iran peace agreement unleashed a wave of supply into a market still grappling with weak demand, reviving worries of a global crude surplus. The selloff marks a sharp turnaround. Less than three months ago, global benchmark crude prices were at record highs. Only weeks earlier, senior industry executives said inventories had dropped to critically low levels as the Iran crisis disrupted flows. Beyond the immediate impact of reopening the Strait of Hormuz, analysts at major institutions including Morgan Stanley and Goldman Sachs warned this week that the market could face oversupply next year. Kit Haines, Head of Oil Research at energy consultancy Energy Aspects, said, \u0022The overwhelming sentiment in the market right now is bearish.\u0022 Even before the U.S.-Iran memorandum of understanding to reopen the strait was signed in mid-June, Persian Gulf suppliers had already started ramping up shipments. In the weeks after the agreement, more than 60 million barrels of crude that had been stranded by the outbreak of war poured back into the market. (Jin10) (Source: ODAILY)