On Thursday, oil prices experienced a decline as Brent crude futures dropped 1.13% to $78.65 a barrel and U.S. West Texas Intermediate futures fell 1.26% to $75.82 per barrel. This drop came after President Donald Trump reportedly signed a deal with Iranian counterpart Masoud Pezeshkian aimed at resolving ongoing conflicts in the region.
However, Trump also warned that military action could resume if Iran does not comply with the agreement, stating, 'We're going to bomb the hell out of them if they violate the agreement.' The International Energy Agency (IEA) indicated that a resolution to the conflict could lead to increased oil supply, predicting a significant overhang in the market next year.
The IEA's report suggests that global oil supply is expected to decrease by 3.9 million barrels per day on average in 2026, dropping to 102.4 million barrels per day, before rebounding to 110.3 million barrels per day in 2027.
While lower oil prices may alleviate inflation concerns related to energy costs, New York Life Investment Management cautioned that the situation is not entirely resolved, noting that oil prices remain above pre-conflict levels and that it will take time to normalize shipping and replenish inventories and strategic reserves