Oil falls as US-Iran deal nears, risks remain

Brent crude (UKOIL) futures fell 3.37% on June 12, 2026, settling at $87.33 a barrel, the lowest level since early March. U.S. West Texas Intermediate crude (USOIL) declined 3.23% to close at $84.88 a barrel. The drop came as traders reacted to growing confidence that the United States and Iran were close to reaching a memorandum of understanding to halt the war in the Gulf and reopen key shipping lanes.

Market participants were responding to signals that a memorandum could be signed soon, with Geneva cited as a likely venue. Headline optimism about a de‑escalation and the potential reopening of the Strait of Hormuz outweighed short‑term concerns about tight supplies, at least for the trading session.

While oil prices fell, equity markets moved higher. The S&P 500 (SPX) rose about 0.5% on June 12, reflecting improved risk appetite as investors weighed the prospect of reduced geopolitical tensions. Asian markets were also stronger, with Japanese stocks recording multi‑percent gains.

Expectations that a peace understanding could be reached within days contributed to the positive tone in equities. Investors appeared to interpret the potential deal as reducing immediate downside risks to global growth from the conflict in the Gulf.

Pakistan’s Prime Minister Shehbaz Sharif said mediators believed a "final, agreed upon text" of a U.S.-Iran agreement had been reached and that Pakistan was working with both sides on next steps. U.S. officials said a memorandum of understanding was close and described the framework as performance‑based.

The emerging arrangement would include dismantling Iran’s nuclear program, removing or destroying enriched uranium, and reopening the Strait of Hormuz. U.S. officials said that once a memorandum is signed, a 60‑day period would follow to work out technical details such as the removal of enriched material and the sequencing of sanctions relief.

Iranian state media published draft language that reportedly included U.S. withdrawal of forces, lifting of the naval blockade within 30 days, and large reconstruction or financial packages, with one report citing $300 billion in reconstruction money. U.S. officials rejected the leaked descriptions, saying they did not match the U.S. account of the talks.

U.S. officials emphasized that Tehran would not receive cash simply for signing an agreement and that any economic benefits, including sanctions relief or access to funds, would depend on verified Iranian performance. They underlined that relief measures would be contingent on Iran meeting its obligations under the prospective framework.

Despite the immediate price decline, analysts and industry sources noted that global and regional oil inventories remain low. They warned that even if the Strait of Hormuz fully reopens, it could take months for oil flows to return to prewar levels and for countries to replenish stockpiles.

ING analysts said that low inventories combined with seasonally stronger demand could push prices significantly higher, toward $120–$130 per barrel, by late July if flows through the region do not resume before then. This leaves the market exposed to renewed upside price pressure, even as traders currently price in optimism over a potential U.S.-Iran agreement.