Overview
- U.S. and Iranian negotiators signed an interim memorandum and the U.S. issued a 60-day sanctions waiver that reopened the Strait of Hormuz to limited commercial tanker traffic, prompting markets to reprice risk this week.
- Brent and WTI fell from conflict highs into the mid-$70s per barrel as traders reacted to the waiver and resumed sailings, and the U.S. national average for gasoline has dropped toward about $3.92.
- Physical constraints slow the flow of actual barrels: mine clearance, insurer and shipowner confidence, port damage, shipping backlogs and refinery crude-slates must be resolved before supply fully normalizes.
- Inventories are deeply drawn and the U.S. Strategic Petroleum Reserve stands near its lowest level since 1983 at roughly 331 million barrels, creating strong restocking demand that can support prices even as futures fall.
- The near-term outlook is mixed for drivers and markets because seasonal summer demand and active restocking could limit further price declines and leave prices vulnerable to setbacks in implementation or renewed regional fighting.