Oil rises amid renewed geopolitical concerns

Oil drilling rigs

Oil prices rose at the close of trading today, June 17, after comments by US President Donald Trump raised doubts about the sustainability of the agreement with Iran. In addition, expectations of a global supply surplus in the coming years limited gains.

Trump stressed that the memorandum of understanding with Iran is not yet final, indicating the possibility of resuming military operations if results of the agreement are not satisfactory or if Tehran does not adhere to its terms.

Despite the US and Iran announcing an understanding to end the war and reopen the Strait of Hormuz, uncertainty about the future of the agreement has kept the geopolitical risk premium present in the market.

On the supply side, data from the US Energy Information Administration showed that total crude oil inventories – commercial and strategic reserves – declined for the tenth consecutive week, reaching their lowest level since 1985.

In contrast, the International Energy Agency predicted that the oil market could face a large supply surplus during 2027, as it expects global supplies to increase by about eight million barrels per day compared to demand growth of only about two million barrels per day.

*Settlement on June 17.