Global oil prices fell sharply on Thursday amid growing optimism around a potential U.S.-Iran nuclear agreement and an unexpected rise in U.S. crude inventories, both of which stoked fears of oversupply in the global market.
Brent crude was down $1.98, or 3%, to $64.11 per barrel by 12:17 GMT, while West Texas Intermediate (WTI) crude fell by $2, or 3.2%, to $61.15.
Market sentiment was rattled after U.S. President Donald Trump indicated that Washington was edging closer to a breakthrough in talks with Tehran. In comments made Thursday, Trump said the two sides were “very close” to finalizing a deal, and that Iran had “sort of” agreed to the terms.
Even as diplomatic efforts progressed, the U.S. Treasury Department announced fresh sanctions on Wednesday targeting Iran’s domestic missile component manufacturing. This followed sanctions a day earlier on a network of 20 companies alleged to have facilitated Iranian oil shipments to China.
The diplomatic push comes after the fourth round of U.S.-Iran talks in Oman, where both sides have been seeking resolution on longstanding disputes over Iran’s nuclear program.
Inventory Surprise Deepens Bearish Sentiment
Oil markets also reacted negatively to new data from the U.S. Energy Information Administration (EIA), which revealed a surprise 3.5 million barrel increase in U.S. crude stockpiles last week pushing total inventories to 441.8 million barrels. Analysts had forecast a draw of 1.1 million barrels.
At the same time, the International Energy Agency (IEA) raised its 2025 oil demand growth forecast by 20,000 barrels per day to 740,000 bpd, citing improved global economic performance and lower oil prices boosting consumption.
However, the agency warned that headwinds remain. The IEA expects demand growth to slow to 650,000 bpd through the rest of the year, down from nearly 1 million bpd in Q1, due to economic uncertainty and accelerating electric vehicle sales.
Meanwhile, OPEC+ continues to ramp up supply, though OPEC on Wednesday revised down its projection for production growth among non-OPEC+ producers, including the U.S.
