We suspect we are likely at or VERY NEAR a bottom in oil prices as the market reacts to the Iran MOA Signing.
The headlines are out:
US and Iran have a Memorandum of Understanding – a 60 day framework to actually sign a deal to end the conflict, reopen the Strait of Hormuz, lift the naval blockade, and grant phased oil sanctions relief in exchange for nuclear limits and compliance checks.
Note that a deal actually has not been signed- just a Memorandum of Understanding.
☢️The uranium component reportedly will be negotiated during the 60 days.
Newsflash- Iran won’t change their position one iota- they’re not giving up their nuclear dust. ☣️
Markets reacted exactly as expected: oil prices plunged (Brent briefly below $83), risk premium evaporated, and traders dumped oil & bid up stocks and risk assets.
But here’s why global oil prices may well rise from here despite the apparent bearish headline:
1. Supply won’t flood the market overnight
Sanctions waivers are phased and conditional – tied to verifiable nuclear steps, stockpile reductions, and inspections over the coming 60-day negotiation window.
Iran can’t instantly ramp exports to pre-sanctions levels. Real additional barrels will take MONTHS, not days.
2. Hormuz reopening is gradual
Ships are reportedly moving again through the Strait this morning, but clearing mines, restoring full shipping confidence, and normalizing flows through the world’s most critical chokepoint (20%+ of seaborne oil) won’t happen instantly.
Any delays or incidents keep a floor under prices.
3. Geopolitical risk premium isn’t gone – it’s just repriced
Israel has stated that they are not bound under the agreement. Iran insists that the understanding requires Israel to withdraw from Southern Lebanon, and halt all attacks in Lebanon – regardless of further Hezbollah attacks on Israel.
Israel has stated that they will NOT be withdrawing from Southern Lebanon until Hezbollah is disarmed, and Israel continues to defend itself by launching attacks in Beirut over the weekend in responds to renewed Hezbollah drone attacks on Northern Israel.
Iran has already threatened that further responses by Israel will negate the MOA.
Trump will attempt to strong-arm Netanyahu not to respond again to Hezbollah aggression – but Israel may decide to defend themselves.
One Israeli response to another Hezbollah attack and the risk premium snaps back quickly.
The deal is fragile by design.
4. Broader fundamentals remain tight
💥OPEC+ continues to restrain supply. Global inventories are still relatively low after months of disruptions. Asian demand (especially China and India) stays resilient.
💥Summer driving season + refinery maintenance in the Northern Hemisphere supports cracks and outright prices.
Bottom line for traders:
Are we looking at a classic “sell the news” reaction ahead? Oil may have just given you a better entry on the long side.
The MOA reduces one major tail risk but a deal with Iran hasn’t actually been signed.
The market is trading as if a complete deal is actually signed, sealed, and delivered.
Watch the next few weeks closely: positive compliance signals + strong demand data could easily trigger a sharp rebound in oil prices.
What’s your take – is oil now heading back to $60, or will see shortly see oil BACK ABOVE $100 EVEN WITH THE STRAIT OF HORMUZ REOPENED!?
