Oil prices rose more than 1 percent Wednesday after US President Donald Trump threatened ‌to resume bombing Iran if it didn’t “behave”, but remained near three-month lows as the International Energy Agency warned of excess supply next year.

Brent crude futures were up 93 cents, or around 1.2 percent, to $79.89 a barrel at ​1308 GMT, and US West Texas Intermediate gained 79 cents, or 1 percent, to $76.84. Both ​contracts hit their lowest since early March earlier in the session.
Trump said on Wednesday that a memorandum of understanding with Iran was not final, and that he could ​resume a bombing campaign if he did not like it or if Iran didn’t “behave”.

“(There’s) still a ​bit of uncertainty in terms of the US situation ... so it ... makes sense for oil to bounce back from these levels after staging what has been quite a sharp decline in the last few days,” said Fawad ​Razaqzada, market analyst at City Index and FOREX.com.

IEA SAYS INVENTORIES TO BE RESTOCKED IN NEXT ​FEW MONTHS

In its first look at 2027, the IEA said the oil market will enter a significant supply overhang, ‌with global supply set to surge by 8 million barrels per day and demand rising by just 2 million bpd.

In the near term, the agency said the Iran-U.S. deal should provide an opportunity to replenish depleted inventories or build new strategic reserves.

“Markets may be underpricing the depth of ​the supply glut coming ​online,” said Crispus Nyaga, research analyst at Empire FX.

The MoU, not yet public, extends by another 60 days a tenuous ceasefire agreed in April, to allow room for talks ​between the US and Iran toward a permanent truce.

Still, industry officials ​say a full return to pre-war production and refining levels is likely to take weeks, months or even years.

US crude stocks fell 8.3 million barrels in the week ended June 12, market sources said, citing American Petroleum ⁠Institute data.

This ​exceeded expectations for a draw of 4.6 million barrels, ​with official numbers due from the Energy Information Administration at 10:30 a.m. ET (1430 GMT) on Wednesday.

Oil inventories held by OECD member countries fell in May to their lowest level since 1990 as governments drew down stocks to offset the blockage of Gulf crude shipments during the Middle East war, the International Energy Agency said Wednesday.

The drawdown since the start of the conflict has reached 163 million barrels in the Organisation for Economic Cooperation and Development club of wealthy countries, the IEA said in its monthly report.
“Despite the significant reductions in demand for crude oil and refined products, the buffers in the system continue to erode at a record pace,” the agency said.

To ease the burden from soaring oil prices due to Tehran’s effective closure of the Strait of Hormuz, the IEA organised coordinated stock releases of 400 million barrels to the global market, of which 252 million have been released as of June 12.

“The flow of emergency stocks is expected to decelerate somewhat in June and July,” the agency said, after a deal was announced this week to end the war that began on February 28 with US and Israeli strikes on Iran.

But the impact of high prices will weigh heavily on demand through this year, with an expected decline of 1.1 million barrels a day compared to 2025 levels.

“We see growth rebounding to 2 mb/d in 2027, as a normalisation of trade flows, lower oil prices and an improving economic outlook contribute to the recovery,” the IEA said.

The dollar held steady against most major peers on Wednesday ahead of the Federal Reserve’s first policy decision under chair Kevin Warsh, which could see some volatility as investors adjust to a new style of policy making and communication. The euro was flat on the day at $1.1605, while the pound softened a fraction on both the dollar, to $1.3420, and the euro, to 86.5 pence to the common currency, after cooler-than-expected UK inflation data that could give the Bank of England cover to hold off on raising rates this year.

But the big event of the day, the Fed meeting, is still to come, and left investors hesitant to take on large positions. The Fed is widely expected to stand pat at Warsh’s debut meeting. The statement, economic projections and news conference, however, will be scrutinised for any signals of the Fed dropping its easing bias as officials grow more hawkish on inflation risks.

“There have been many central banks meeting this month, but this is the one that’s overshadowing everything,” said Jane Foley, head of FX strategy at Rabobank. “There is a lot of uncertainty over what Warsh might signal. No one is expecting a change in interest rates, but is he going to try and downplay the dot plot? Try and set up a new framework? Try to steer them towards an easing bias?” she said.

The so-called “dot plot” shows policymakers’ expectations for the future path of interest rates. Warsh was appointed by US President Donald Trump, who repeatedly criticised the previous Fed chair, Jerome Powell, for being slow to cut rates. Money market pricing actually reflects around an 80 percent chance of the Fed hiking rates this year.

Before the US and Iran reached an interim agreement to end the war in the Middle East, economists had thought the Fed would signal some willingness to raise rates to try to limit the extent to which elevated energy costs spill over into broader inflation. Now though, oil is back below $80 a barrel and the Fed may give different signals.

Britain’s annual inflation rate was unchanged at 2.8 percent in May as higher petrol prices caused by the US-Iran war were offset by lower food costs, official data showed Wednesday.

The Consumer Prices Index level matched April’s reading, the Office for National Statistics (ONS) said, while an analysts’ consensus forecast had been for an increase to 3.0 percent.

“While the war in the Middle East pushes prices up globally, we have got the right economic plan and inflation has held steady,” finance minister Rachel Reeves said in response.

Even though the United States and Iran agreed this week to a deal to end the conflict, inflation could still rise in the coming months with energy costs remaining above pre-war levels.

The better-than-expected inflation data for May could meanwhile prove fruitless for the Labour government, which is facing a special vote Thursday expected to set in motion an attempt to oust Keir Starmer as prime minister.

Longtime Starmer critic Andy Burnham is hoping to win an election for a parliament seat in northwest England so that he can run for the Labour leadership, and the premiership.

The inflation data also comes before an interest rate decision by the Bank of England, which is expected to hold borrowing costs steady Thursday after energy prices tumbled in recent days thanks to the US-Iran deal.

The Bank of Japan lifted its key policy rate to a 31-year high of 1.0 percent on Tuesday, warning of the risk of heightening inflation risks stemming from elevated crude oil prices due to the Middle East conflict and the weak yen.

The central bank, in the absence of Governor Kazuo Ueda who has been hospitalized for medical treatment, raised the short-term interest rate from 0.75 percent in its first hike since December, saying that the recent U.S.-Iran agreement to end the war is a positive development but still leaves uncertainties over the economy. The bank’s rate hike after keeping it steady at the three previous meetings brings its policy back on a normalization track after a decade of unorthodox easing that ended in March 2024.

The BOJ said in its statement that there is a risk of underlying inflation rising above its target of 2 percent as rises in crude oil prices lead companies to hike prices in business-to-business transactions “at a relatively fast pace,” which could “spread to an increase in consumer prices across a wide range of items.”

BOJ Deputy Governor Shinichi Uchida told a post-meeting press conference that the bank will continue to raise the rate to stabilize inflation at around the 2 percent target, judging that even after the latest hike financial conditions remain accommodative.

Uchida said that one of the major reasons behind the rate hike decision is reduced risks to the economy due to factors such as government measures to secure alternative sources of raw materials including imports of oil from regions other than the Middle East.

Uchida also said that the bank is watching currency moves carefully. On Tuesday afternoon in Tokyo, the U.S. dollar was trading above the 160 yen line, the level where the Japanese financial authorities intervened in the currency market just over a month ago to support the yen.

“We do not target specific exchange rates in guiding our monetary policy, but we engage in policy discussions on the view that currency moves have a crucial impact on economic and price developments,” he said.

Among the remaining eight policymakers excluding Ueda who discussed the policy change, the rate hike decision was opposed by Toichiro Asada, who joined the Policy Board in April and is viewed by the market as a proponent of reflationary policies and in favor of aggressive monetary easing.

In another policy change, the bank said it will pause the plan to reduce Japanese government bond purchases from the next fiscal year starting in April, at a time when long-term interest rates have been rising rapidly.

It will keep the current pace of reducing monthly purchases by about 200 billion yen every quarter for rest of this fiscal year, which would result in buying of around 2.1 trillion yen ($13 billion) per month in the last quarter of fiscal 2026.

But from April 2027 onwards, the bank will no longer reduce but steadily buy about 2 trillion yen a month under the new plan, citing the need to stabilize the bond market.

The BOJ decided in July 2024 to cut back its monthly government bond purchases as part of its efforts to normalize its monetary policy.

While raising the key policy rate could cool the economy by increasing borrowing costs for companies, restraining investment and dampening private spending, the central bank saw the need to respond to inflation risks following the launch of U.S.-Israeli attacks on Iran in late February and subsequent surges in crude oil prices.

The yen repeatedly falling to the 160 zone against the dollar, despite the Japanese authorities intervening in the currency market from late April to early May to curb the unit’s fall, has also stoked concerns about rising import costs for resource-poor Japan.

Even if the U.S.-Iran conflict ends following the two countries’ agreement to end the monthslong war, shipping through the Strait of Hormuz may not immediately stabilize, keeping transport, raw material and other costs elevated, analysts said.

But the agreement will relieve fears of disruptions in Japan’s supply chains, serving to reinforce the view that the economy is resilient enough to withstand further rate hikes, they said.

The decision to raise the rate puts the BOJ in line with other central banks shifting toward tightening of monetary policy amid inflationary pressures, such as the European Central Bank, which hiked its rate last week.

The two-day policy meeting was chaired by BOJ Deputy Governor Ryozo Himino, after Ueda was hospitalized to treat a hepatic cyst infection. Ueda’s hospitalization is “short and there will be no significant impact” on the BOJ’s steering of monetary policy, Uchida said.

Inflation risks have been flagged after Japan’s wholesale prices rose 6.3 percent in May compared to a year earlier -- the biggest increase in over three years. Firms are increasingly passing on rising costs from the war in Iran to the prices of their goods and services.

The data suggested that core consumer inflation may also accelerate, although it has been kept below the bank’s 2 percent target because of government subsidies for electricity, gas and gasoline, the analysts said.

Never bet against Donald Trump? The oil market appears to have made a risky wager from day one of the Iran war: The US president would not allow the conflict to spiral into a full-blown economic crisis. So traders wouldn’t price one in, no matter what was happening with physical supplies. It was a risky call, but it proved correct.

Oil prices certainly swung during the three-and-a-half-month war, as Iran’s key weapon was the unprecedented closure of the Strait of Hormuz. Tehran was able to choke off a fifth of the world’s oil and liquefied natural gas supplies overnight, gaining significant leverage.

Benchmark Brent crude surged from around $70 a barrel before the war to a peak of $118 in late March, before sliding back to $83 after Washington and Tehran announced a preliminary deal on Sunday. Given that the supply disruption was one of the largest in modern history, these moves were remarkably restrained. Consider that oil prices surged to $123 a barrel in the aftermath of Russia’s full-scale invasion of Ukraine in February 2022. This reflected market fears about the partial disruption of Moscow’s oil exports, which had totalled around 7.5 million barrels per day (bpd) the previous year. That is around half the effective volume lost during the Hormuz blockade. For decades, a Hormuz shutdown has been treated as the ultimate doomsday scenario for oil markets. Yet when it finally happened, prices jumped, but they didn’t spiral.

BEND, DON’T BREAK

On the surface, the explanation is straightforward: the physical market did its job. The global energy system displayed extraordinary flexibility and resilience. Governments and companies released hundreds of millions of barrels from commercial and strategic stockpiles. Luckily for them, production had been running hot heading into the conflict, with inventories rising quickly, which helped cushion the blow.

Demand also adjusted. Once the war broke out, Chinese imports weakened sharply, and across much of Asia, governments imposed consumption curbs to dampen energy use. That helped prevent a deeper economic shock. The system bent, but it didn’t break. But that is only half the story, and arguably not the most important half.

TRUMP PUT

Look more closely, and the market’s response to the drawdown in global inventories tells a different tale. Stocks were depleted at an unprecedented pace during the war, falling at an average rate of 5.3 million bpd between March and May, according to the US Energy Information Administration. They were nearing dangerously low levels just as the northern hemisphere was entering peak summer demand. That should have been a flashing red warning sign. Instead, it appeared to reinforce confidence that a deal was near.

What explains this? The implicit bet was clear: Trump would not let the situation deteriorate to a point where US gasoline prices would surge to unmanageable levels and risk reigniting broader inflation, especially with midterm elections looming. Put simply, investors believed he would blink before the market cracked.

So the lower inventories fell, the closer a deal seemed. This pattern should be familiar. During Trump’s second term, markets have repeatedly learned to discount the most extreme outcomes implied by his rhetoric and initial policy moves, whether sky-high tariffs announced on “Liberation Day,” attacks on Federal Reserve independence, or threats to take over Greenland. His most aggressive moves have invariably been followed by retreats once financial markets began to wobble. The so-called “Trump put” is no longer just about equities, however. During the Iran war, it shaped commodity markets as well. Markets weren’t ignoring the risks. They were pricing in Trump’s limits.

YOU CAN ONLY GO SO FAR

But the oil market’s “Trump trade” has boundaries. Unlike equities, which can be buoyed by sentiment for extended periods, commodity markets are ultimately anchored in physical reality. And reality was catching up with the president – and energy traders. Despite the market’s remarkably effective response to the Hormuz shock, the loss of around 1.4 billion barrels of supply since the start of the war still punched a vast hole in global inventories. That gap has not disappeared. Yet the deal announcement has dramatically reduced the risk of a massive spike in oil prices – a warning that was sounded only two weeks ago. The challenge now is that supply and demand are unlikely to recover in step, pointing to a period of volatility.

On the one hand, demand could spike. Refiners, traders and governments that drained inventories during the crisis will have to refill them. That will create a new wave of demand that could tighten markets as summer demand peaks and supply buffers remain thin. The strain is already visible in the United States. After pushing exports to record levels during the crisis, US crude inventories have fallen to their lowest since 2004, while gasoline stocks are at their lowest since 2014.

On the other hand, supply could recover faster than many anticipate as revenue-starved Gulf producers scramble to regain market share. This could ultimately lead to a bigger price drop than traders are currently pricing in.

TRADING THE TRUMP

Throughout the war, Trump’s jawboning of oil markets was effective, repeatedly boosting investor expectations for a quick resolution even as conditions on the ground deteriorated. The US-Iran deal announced on Sunday was vague and offered limited gains for Washington. But it arrived just as the market was running out of room. Its timing was probably not a coincidence. Investors understood that Trump’s tolerance for market pain had limits, and those limits mattered as much as pipelines, tankers and storage tanks. They bet on it. This time, they were right.

QatarEnergy is ready to resume liquefied natural gas production ​at its Ras Laffan LNG plant very quickly ‌and could reach within a month full output of facilities unaffected by Iranian strikes, a person with knowledge of the matter told Reuters ​on Tuesday (16 June).

Two of Qatar's 14 LNG trains and ​one of its two gas-to-liquids (GTL) facilities were damaged in ⁠the strikes, which knocked out 17% of the country's ​LNG export capacity, and will take years to repair, the ​group's CEO told Reuters in March.

However, production at other facilities, idled because of the de facto closure of the Strait of Hormuz oil ​and LNG export gateway for the region during the Iran ​war, could be quickly restored, the source said.

"The problem will be how ‌fast ⁠can we bring ships in and how fast we can load them after the strait opens," the person, who declined to be named, told Reuters. "It's more of a shipping ​and logistics problem ​than production."

Despite ⁠a framework agreement between the US and Iran on terms to end their war and reopen ​Hormuz, a little more than a dozen LNG ​tankers ⁠have managed to exit the strait since the war began in late February.

Shippers are awaiting reassurance on safety to cross the ⁠strait, ​including the clearing of mines, which ​could delay a return to normal shipping traffic by weeks.

Myanmar’s inflation spiked to nearly 25 percent as shocks from the Middle East conflict compounded the effects of the country’s civil war, the World Bank said Tuesday.

The Bank also slashed its growth forecast for the financial year that started in April, citing “a less favorable external environment”.

Myanmar has been mired in civil war since the military snatched power in a 2021 coup, plunging it into a half-decade of instability and a backslide into poverty for many of its more than 50 million citizens.

The country also imports 90 percent of its fuel oil, according to official figures, leaving it highly exposed to closure of the Strait of Hormuz since the US-Iran war started on February 28.

That sent inflation to as high as 24.6 percent on-year in April, according to the Bank’s biannual Myanmar Economic Monitor report, which also saw officials cut their 2026-27 economic growth outlook to two percent, from three percent previously estimated.

Myanmar’s economy is “stabilising at low levels” the World Bank said, but “a renewed fuel shock magnifies longstanding structural weaknesses and leaves the outlook highly vulnerable to further disruption”.

“The fuel shock has reignited inflation pressures,” senior economist Kemoh Mansaray told reporters.

“What this means is household purchasing power has gone down, and these households were already facing very thin buffers with high poverty levels.”

Inflation for the 12 months to the end of March came in at 21.1 percent.

The Bank’s report also said 2025 poverty levels hit 29.9 percent -- “still far above pre-2021 trends”.

“Because we’re struggling just to afford food, there are children we can’t send to school,” said one 28-year-old father in Yangon, speaking on condition of anonymity for security reasons.

“We have three school-age children at home,” he said.

A female Yangon shopkeeper -- also speaking anonymously -- complained soaring prices had crippled her business and family.

“Our income and expenses don’t match. We just manage day by day,” added the 45-year-old.

“Prices only go up, they never go down,” she said. “Now no matter how much we earn, it’s still not enough.”

The closure of the Strait of Hormuz has been particularly damaging to Asia, where 80 percent of oil transiting the seaway is bound, according to the International Energy Agency.

US President Donald Trump said Monday ships were again sailing through the strait after Washington and Tehran announced a deal to end the war, and claimed the oil route would be “completely open” by Friday.

However analysts warn economic recovery from the conflict will be a long process.

Oil prices slid to fresh three-month lows on Tuesday as markets weighed prospects for a resumption of supplies through the Strait of Hormuz alongside weaker physical demand and scant details on a preliminary deal to end the Iran war.

Brent crude futures were down $1.44, or 1.7 percent, at $81.73 a barrel, the lowest since March 10, at 0906 GMT.

US West Texas Intermediate was down $1.55, or 1.9 percent, at $79.20 a barrel, also the lowest since March 10. Oil prices had already dropped nearly 5 percent on Monday to their lowest close since March 4 after US President Donald Trump said a memorandum of understanding had been signed to end the US-Israeli war with Iran, though full details have not been released. Iranian Foreign Minister Abbas Araghchi said on Tuesday Iran and the US would start a new round of talks in Switzerland on Friday to reach a final agreement after the start of an interim deal. He warned that any Israeli attack on Lebanon or continued presence on Lebanese territory would breach the interim agreement.

INVESTORS EYE STRAIT REOPENING

The conflict led to the closure of the Strait of Hormuz, which typically carries about one-fifth of global oil supplies. Some analysts expect flows through the strait to resume soon, adding to downward pressure from already soft physical markets. Goldman Sachs lowered its fourth-quarter Brent forecast to $80 a barrel from $90 and cut its 2027 average estimate to $75 from $80, saying it now assumes Gulf exports return to pre-war levels by the end of July rather than late August. A range of indicators has pointed to weakening physical oil markets in recent weeks, Morgan Stanley analysts said in a client note. China’s crude imports slumped 29 percent in May to their lowest in eight years, extending a sharp decline for the world’s largest importer, with shipments of Saudi crude also expected to fall in July. Early indications suggest the US-Iran deal would reopen the blockaded Strait of Hormuz and extend a ceasefire for 60 days, buying time for negotiations on issues including Iran’s nuclear programme.

But with details still unclear and a permanent truce yet to be secured, analysts say volatility risks remain. Suvro Sarkar, the head of DBS Bank’s energy research, said the deal’s first phase - encompassing the Geneva signing of the ceasefire extension - was easy. The second phase - the reopening of the Strait of Hormuz and winding down the US naval blockade on Iranian ports and vessels - would be watched closely by markets, he added. “Anything other than a clean simultaneous unlock will mean renewed volatility in oil prices,” Sarkar said. “Given the trust deficit so far, it will be interesting to see how this plays out over the next couple of weeks.”

International oil prices have fallen sharply amid signs of easing tensions between the United States and Iran, but consumers in Bangladesh are unlikely to see immediate relief at the pump as the government continues prioritising the recovery of subsidy costs accumulated during recent market volatility.

The international benchmark Brent crude, which is used to price refined petroleum products, stood at around $72.48 per barrel on 27 February, just before the Iran conflict escalated. It surged during the conflict, reaching a peak of $112 per barrel on 18 May – an increase of 54.5% from pre-war levels.

Since then, prices have retreated sharply. Brent was trading at $83.19 per barrel yesterday (15 June), down 4.74% in a single session amid reports of progress in potential US-Iran negotiations. The benchmark has now fallen 25.7% from its May peak, though it remains 14.8% higher than pre-conflict levels.

Despite the correction in global markets, Energy Division officials say domestic fuel prices are unlikely to be reduced in the near term.

"Oil prices are falling in the international market but are still higher than the pre-war level, which continues to require substantial subsidy support for diesel," said Monir Hossain Chowdhury, Joint Secretary (Operations Wing) of the Energy Division. He added that diesel still requires a subsidy of about Tk50 per litre.

"We are monitoring the global fuel market closely. Future decisions on price adjustments will depend on market movements, as discussions on the Iran issue are still ongoing," he said.

Officials estimate that fuel subsidies in FY2025-26 could reach around Tk5,000 crore, largely to keep diesel prices below cost. Petrol, octane and other petroleum products are currently priced largely in line with international markets and do not require subsidy support.

Middle Eastern crude benchmarks see steeper decline

The decline has been steeper in Middle Eastern crude benchmarks used for Asian pricing.
Murban crude, produced in the United Arab Emirates, fell from $110.04 per barrel on 18 May to $77.31 yesterday, a 29.7% drop.

Arab Light crude, used by Bangladesh Petroleum Corporation for refining at Eastern Refinery, declined from $119.09 to $87.75 over the same period, down 26.3%.

Prices were raised as global oil surged

Domestic fuel prices were previously raised on 18 April, when global markets spiked amid fears of supply disruption following the US-Israeli attack on Iran. At that time, Brent crude closed at $91.87 per barrel – already 26.8% higher than the pre-war level.

Diesel was increased to Tk115 per litre from Tk100, octane to Tk140 from Tk120, petrol to Tk135 from Tk116, and kerosene to Tk130 from Tk112. A second adjustment on 31 May added Tk5 per litre to octane, petrol and kerosene, taking them to Tk145, Tk140 and Tk135 respectively.

Energy expert M Tamim said declines in global prices do not always translate into lower transport or commodity costs domestically. "Price reductions during downward cycles rarely reach consumers, as bus fares and freight charges do not adjust accordingly. That is why there is limited pressure to reduce fuel prices," he said.

He added that stronger monitoring in the transport sector would be needed to ensure that any future reductions in fuel prices benefit consumers.

Gold rose more than 2% on Monday after US and Iran officials said they had reached an initial agreement to end their war, pushing oil prices lower and easing concerns about inflation and higher interest rates.

Spot gold climbed 2.3% to $4,316.03 per ounce by 0730 GMT, hitting its highest level since 9 June and extending gains for a third straight session. US gold futures for August delivery rose 2.3% to $4,337.20.

US and Iranian officials said on Sunday they had agreed on a framework to end their war, halt the US blockade of Iran and reopen the Strait of Hormuz.

The pact will be officially signed on Friday in Switzerland, Pakistani Prime Minister Shehbaz Sharif said in a post on X.

The US dollar fell to a 10-day low, making greenback-priced bullion cheaper for other currency holders, while oil prices slipped more than 4%.

"Lower oil prices and a softer dollar, stemming from reduced geopolitical risk and the anticipated reopening of the Strait of Hormuz, are helping to calm inflation expectations," said Tim Waterer, chief market analyst at KCM Trade.

"This combination is providing the precious metal with its best tailwind in recent weeks, though sustainability will depend on how durable the peace agreement proves to be."

Gold prices have fallen about 20% since the start of the US-Israeli war against Iran in late February. The effective closure of the Strait of Hormuz has led to a sharp increase in global oil prices, stoking inflation concerns and raising expectations of interest rates staying higher for longer.

Bullion loses appeal in a high-interest-rate environment as it is a non-yielding asset.

Markets have scaled back expectations for a US rate hike in December to 51% after the peace deal, down from 69% last week, according to the CME FedWatch tool.

Investors now await the Federal Reserve policy decision and remarks, the first under Chair Kevin Warsh, on Wednesday, with rates widely expected to remain unchanged.

"Currency debasement concerns, fiscal risks and ongoing geopolitical fragmentation continue to underpin long-term demand (for gold). A moderation in energy-led inflation could help these themes regain traction," OCBC said in a note.

Spot silver rose 3.3% to $70.22 per ounce, platinum gained 2.7% to $1,763.38 and palladium climbed 2.7% to $1,317.22.

Oil prices slipped to a three-month low on Monday after US President Donald Trump and Iran’s deputy foreign minister said they had reached an initial deal to end the war and to resume traffic through the Strait of Hormuz.

Brent crude futures fell $3.65, or 4.2 percent, to $83.68 a barrel by 0630 GMT and US West Texas Intermediate was at $80.75, down $4.13, or 4.9 percent. Both contracts fell to their lowest levels since March 10 on Monday after tumbling more than 3 percent on Friday.

The US and Iran will sign a memorandum of understanding in Switzerland on Friday, said the prime minister of Pakistan, whose country has served as a mediator.

Trump said on Sunday that the Strait of Hormuz would be open “toll free” and that a US naval blockade of Iranian ports would also end. Iran’s semi-official Mehr news agency said the draft deal called for reopening the Strait of Hormuz within 30 days under Iranian arrangements.

“The geopolitical risk premium that had been built into crude is now being unwound quite aggressively as traders price in the prospect of restored oil flows,” said Tim Waterer, chief market analyst at KCM Trade.

The world has lost millions of barrels of oil and gas supply since the war closed the Strait of Hormuz, a chokepoint for a fifth of the world’s oil and liquefied natural gas supplies, for more than three months. Investors are also watching cautiously how quickly Middle Eastern producers can resume oil production and exports following damage from the war and whether more ships will enter the region.

“While these uncertainties suggest upside risks to our forecast for Brent oil futures to reach $80/bbl by the end of the year, it’s worth noting that oil flows through the Strait of Hormuz just needs to reach 60-70 percent of pre-war levels to return oil markets to pre-war oversupply expectations,” Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia, said in a note.

Iran’s deputy foreign minister, Kazem Gharibabadi, said a more expansive agreement would be negotiated during a 60-day ceasefire period.

E4 nations, which include the UK, France, Germany and Italy, said on Sunday the countries were prepared to lift sanctions on Iran in response to steps on its nuclear programme.

“Beyond the immediate price reaction, attention will now shift toward the pace of actual supply normalization and compliance with the agreement,” said Priyanka Sachdeva, senior market analyst at Phillip Nova. “While the conflict may have come to an end and oil flows through the Strait of Hormuz may gradually return to normal, the damage already done cannot be reversed overnight. This includes not only any physical damage to oil infrastructure but also the economic strain endured by oil importing economies that have faced elevated energy costs for months.”

The United States is set to release $12 billion in frozen Iranian assets before the commencement of negotiations with Tehran, Iran's Mehr news agency reported today (15 June), citing a 14-point memorandum of understanding between the two countries, reports AFP.

According to the document published by Mehr, a total of $24 billion in frozen Iranian assets would be released during a 60-day negotiation period following the conclusion of the memorandum.

The document states that "half of this amount must be made available to Iran before the start of the negotiations."

The memorandum cited by Mehr has not been officially confirmed by either Washington or Tehran.

US and Iranian officials said they had reached an agreement to end their war and reopen the Strait of Hormuz, a preliminary pact that sent oil prices lower but leaves the future of Tehran's nuclear programme subject to further negotiations.

Although still a framework agreement, the deal marks the most significant breakthrough yet in efforts to resolve a conflict that has killed thousands and disrupted global energy markets since it began with joint US-Israeli strikes on Iran in February.

"The Deal with the Islamic Republic of Iran is now complete," US President Donald Trump wrote on his Truth Social platform at around 5:30pm in Washington (2130 GMT) on Sunday.

Trump's announcement came shortly after Pakistani Prime Minister Shehbaz Sharif, whose country has acted as a mediator between the two sides, said a deal had been reached early Monday local time.

The memorandum of understanding underpinning the agreement is scheduled to be formally signed in Switzerland on Friday.

Iran's foreign ministry spokesperson Esmaeil Baghaei has indicated that Iran and Oman may impose "fees" on ships passing through the Strait of Hormuz, reports Al Jazeera.

"The Strait of Hormuz is very important for us, and we have adopted certain procedures according to international law in order to protect Iran's national security and the Islamic Republic of Iran," Baghaei told a press conference.

"Our goal is to pave the way for a secure passage in this waterway. We need a certain period of time to discuss with the other sides this important matter," he said.

Baghaei said that "fees" would be charged for vessels using the strategic waterway.

"It's full services that will be offered in order to keep and maintain the environment," he said.

"So many other services will be offered by Iran and Oman, and this will cost money. Accordingly, the fees will be there, and this is clear," he added.

The US dollar traded around a 10-day low against other major currencies on Monday as a preliminary agreement to end the war between the US and Iran sent oil prices tumbling and boosted demand for riskier assets. US and Iranian officials said on Sunday they had agreed on a framework for a deal to end their war, halt the US blockade of Iran and reopen the Strait of Hormuz.

The memorandum of understanding is scheduled to be officially signed on Friday in Switzerland, but caution still lingered as markets awaited more details and as the fate of Iran’s nuclear program was left for further negotiations.

Oil prices slumped, with Brent crude futures down around 5 percent to $82.9 a barrel. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was little changed at 99.52, hovering around its lowest since June 5.

Nick Rees, head of macro research at Monex Europe, said that despite the preliminary deal between the US and Iran, markets would likely be cautious about pricing in further optimism.

“There’s plenty of room to be disappointed here,” he said. “Crucially, we haven’t heard anything on the nuclear side. If that comes through over the next few days, then I think we can be a bit more constructive.”

“But without a nuclear agreement, I don’t think we can simply assume that any deal’s going to hold. So we are cautiously optimistic, but that warrants a relatively small FX reaction,” Rees said.

The euro was last 0.32 percent higher at $1.1605, and sterling rose 0.16 percent to $1.3428. Both were near the strongest level since June 5.

The Japanese yen was broadly steady at 160.10 per dollar, continuing to hover around the 160 level widely seen as a line in the sand for potential official intervention.

High oil and gasoline prices and energy supply problems will not be solved overnight, despite an agreement to end the Iran war and open the Strait of Hormuz announced Sunday (14 June).

It will likely take months before energy companies can resume operations to the point of meeting the world's demand, according to energy experts.

The slow pace of the process of shipping and refining crude oil and doubts about the security of travelling through the strait mean the effect will not be seen immediately, they said.

Ships loaded with crude oil have been stranded in the Persian Gulf for more than three months, unable to safely travel through the waterway, through which about a fifth of the world's oil and gasoline supplies typically travelled before the war began.

"It's going to take time for people to feel comfortable and for insurance to be in place... particularly to get people on the ground to restart some of these assets," said Daniel Evans, global head of fuels and refining research at S&P Global Energy.

First, ships that have been stranded will have to exit the strait and then new tankers will have to come in to be loaded, Evans said.

"To bring a ship in, you need to be confident that you've got a big enough window of safety to bring it in, load it and move it out," he added.

Oil tankers also move slowly, he explained. It takes months to travel from the strait to distant countries, deliver the crude oil to a refinery for processing and then arrive at its final destination.

The extreme ​volatility of global oil prices has drained liquidity from the market this year at the fastest pace ‌on record, as investors have become increasingly wary of committing cash to an asset that has become hostage to US President Donald Trump’s daily social media posts on the Iran war.

Liquidity, or how well matched the number of buyers is to the number of sellers, is the ​product of a number of factors, including traded volume and open interest.

Open interest, or the number of Brent ​crude futures contracts that investors own, has fallen by nearly 17 percent this year, the fastest rate since at least 2009, according to LSEG data .

Trump’s pattern of ratcheting up threats against Tehran, only to assert hours later ​that a peace deal is imminent, as well as the difficulty in tracking real-world oil fundamentals right now, has led ​to a degree of fatigue among investors, traders say.

“People are exhausted by this chaos. They want this to be over. You cannot trade futures without being constantly burned in an environment when the messaging changes every other hour,” a senior executive from a major trading desk said. ​The executive asked not to be named due to the sensitivity of the matter.

Oil prices fell nearly 3 percent to their lowest ​in nearly two months on Friday after Trump called off threatened new strikes on Iran on Thursday, saying a deal to end ‌the war was close.

The front-month August Brent futures contract registered the lowest open interest since last July when it became the most-actively traded at the start of this month, with 534,227 lots. Open interest peaks at the start of the month and gradually dwindles until expiry of the contract, at which point, it shifts to the next month in the ​chain.

When liquidity becomes thin, buyers and ​sellers must often accept far higher, or lower prices than they otherwise would, because of a dearth of willing counterparties, thereby creating larger price swings. This increases possible rewards, but also the risk of losses.

Former ​Goldman Sachs commodities chief Jeffrey Currie said this week the real reason the oil ​price had not returned meaningfully above $100 a barrel in the past few weeks was not a sign of supply - which has been severely constricted by the near-closure of the Strait of Hormuz - being plentiful, but rather of what he called “capital aversion”.

“Policy uncertainty has made oil too volatile to ​hold,” he said in a post on X on June 10.

“2026 year-to-date open interest ​decline is the worst on record. Unlike 2022, there’s no rates shock or sanctions forcing the exit. This is capital aversion,” Currie, who is a ​senior adviser to alternative asset manager Carlyle, said.

Britain’s economy contracted in April as the Middle East war hit growth, official data showed Friday, dealing a setback to Prime Minister Keir Starmer as he grapples with a political crisis.

Gross domestic product fell 0.1 percent in April following growth of 0.3 percent in March, the Office for National Statistics said in a statement.

The reading matched analysts’ expectations and followed a stronger-than-expected performance in the first quarter. Surging energy prices triggered by the war, which began with US-Israeli strikes on Iran on February 28, have reignited inflationary pressures and threatened to derail growth.

“Before the conflict in the Middle East, growth was higher than expected and inflation was falling,” finance minister Rachel Reeves said in response to the figures.

“This is not a war we wanted or joined, but one that will have an impact at home,” she said.

The weak economic showing dealt a fresh blow to Starmer, who is facing calls to step down.

Britain’s defence and armed forces ministers quit Thursday in a row over military spending, further weakening Starmer’s authority just a week before a by-election that could prompt a bid to replace him.

Defence Secretary John Healey resigned warning that Starmer’s long-awaited Defence Investment Plan for funding over the next decade -- which the leader has yet to publish -- risked making Britain “less safe”.

“The effects of the conflict in the Middle East are now well and truly showing up in the economic data, and it isn’t pretty reading for the UK,” said Stuart Clark, portfolio manager at Quilter.

“We expect the economy to continue to fade as the year goes on, and particularly for as long as there is no lasting peace deal in the Middle East,” he added.

Gold prices have fallen sharply in 2026 despite a major conflict involving the United States, Israel and Iran, challenging the precious metal's traditional reputation as a safe-haven asset during periods of geopolitical turmoil.

Prices have declined from a January peak of $5,303 per troy ounce to around $4,235, marking the lowest levels of the year even as tensions in the Middle East continue, says Al Jazeera.

Why is gold usually considered a safe-haven asset?

Investors often buy gold during periods of economic uncertainty, geopolitical conflict or inflation because it is viewed as a store of value that can preserve wealth when other assets come under pressure.

However, gold's performance can also be influenced by factors such as interest rates and the strength of the US dollar.

How has the conflict affected the economy?

The current economic environment has been shaped by the US-Israel war against Iran, which began in late February.

Iran's response has included blocking the Strait of Hormuz, a key route for global oil and gas shipments. The disruption has driven energy prices higher and pushed US inflation to a three-year high of 4.2%.

Why has higher inflation not helped gold?

Although gold is often used as a hedge against inflation, investors are increasingly focused on the possibility of higher interest rates.

Gold is a non-yielding asset, meaning it does not pay interest or dividends. Investors earn returns only if its price rises.

When interest rates increase, assets that generate income become more attractive relative to gold. As a result, demand for the metal can weaken even during periods of elevated inflation.

What has changed in interest rate expectations?

Earlier in 2026, financial markets expected interest rate cuts.

Those expectations have shifted as inflation has remained elevated and the labour market has stayed resilient. Investors now see a 50% probability that interest rates could be raised by December.

The prospect of tighter monetary policy has increased pressure on gold prices.

What role does the US dollar play?

The conflict has strengthened the US dollar, creating another headwind for gold.

Because gold is priced in dollars, a stronger US currency makes the metal more expensive for buyers using other currencies. This can reduce demand and weigh on prices.

Analysts describe the current dynamic as a balance between inflation, which would normally support gold, and rising interest-rate expectations, which are currently exerting greater influence on the market.

What is the outlook for gold?

Gold prices have recovered slightly following reports of a potential agreement between the United States and Iran.

Market participants say a ceasefire could help ease inflationary pressures by reducing disruptions to energy markets. However, gold may continue to face challenges in the coming months as central banks respond to the recent surge in inflation and investors assess the future path of interest rates.

Omega’s Constellation watch has been flashed in campaigns, movies and at the Met Gala by stars like George Clooney and Nicole Kidman, turning it into a symbol of luxury and glamour. But with gold prices near record highs struck in January, some such classic watches are being melted down as the value of their metal content outstrips their resale worth.

Used models by the likes of Omega and LVMH’s TAG Heuer are most hit by the trend, according to Reuters interviews with over a dozen traders, industry experts, and investment advisers.

British dealer Jon White of Gold Traders melted down an 18-carat late-1970s Constellation in excellent condition in May, one of dozens of mainstream luxury watches he has had scrapped this year as demand for investment gold has risen.

“Beautiful watch. But in reality, had the customer consigned that to auction, what would they have achieved?” White, who also manages an auction house, told Reuters. The gold content of the Constellation watch, one of many models produced by Swatch-owned Omega, was worth £5,750 ($7,749), 35 percent more than its estimated £4,000-4,500 auction value, White said.

James Lamdin, founder of Watches of Switzerland’s second-hand unit Analog Shift, said melting was “primarily happening with contemporary pre-owned and also with older vintage watches that are not already collectible.”

Spokespersons for Swatch and Rolex said they would not comment for this story. LVMH, Richemont, Patek Philippe and Audemars Piguet did not respond to requests for comment.

LIQUID GOLD

Gold prices surged to a record $5,600 an ounce in January as geopolitical concerns and trade worries pushed investors towards safe-haven precious metals. Gold now hovers around $4,200 per ounce, almost double its 2024 average. The market price for used watches has not moved in the same way, however.

“I find it very sad, because obviously once something has been melted, it’s gone forever,” said Adrian Hailwood, a specialist in horological history.

There are no official figures showing how many luxury watches are being melted. World Gold Council data shows overall gold recycling in the first quarter rose 5 percent to 366 tonnes, while gold jewellery demand rose 31 percent in value to $47 billion.

Watches can hold anything from a sliver of gold to more than 200 grams, meaning their scrap value can run into tens of thousands of dollars. In an Omega Constellation, the gold can be found in the case and the strap.

With gold expected to reach between $5,400 and $6,300 an ounce this year, the pressure to dismantle some watches will continue, especially as traders that resell them must cover costs and the expense of providing a warranty. New watches that are over-produced might also be melted down.

“I’ve seen a lot of totally mediocre watches get melted down,” said Lamdin. “There’s a lot of unsold overstock in the Swiss market. And those watches are basically brand new, unworn, and they’re just getting stripped down... they made too many of them.”

“But when you have something that’s vintage and rare and has some story or some patina, that’s where it becomes a short-sighted tragedy.”

THE RESALE TRAP

High-end brands that tightly manage new production like privately owned Patek Philippe and Rolex command the highest premiums over melt value, three industry experts said.

For some models “the wait lists are astronomical. You’re talking anything from two to eight years,” said Simon Lazarus, head of PR and content at online luxury watch platform Chrono Hunter.

Rolex accounted last year for 61 percent of the sales value of new Swiss watches priced above 3,000 Swiss francs ($3,770), up from 57 percent in 2023 despite lower volumes, according to Vontobel.

Less exclusive brands like TAG Heuer, Breitling and Omega struggle to command high new retail prices, however, as buyers can buy a second-hand timepiece for much less. Models like Omega’s Speedmaster often depreciate sharply once sold, exposing them to scrapping, three experts said.

Higher gold prices motivated retired New York engineer Mitchell Talisman to sell two gold watches and a chain containing a combined 35 grams of gold with 58 percent purity for $2,660 cash in December.

“I’d had a bunch of stuff sitting in a safety deposit box for over 10 years,” he told Reuters.

For some owners however, the idea of selling a watch only for it to be melted by a dealer is too much to bear. “It may be a family piece, it may be their first watch,” said Hailwood. “They don’t like the idea of it being destroyed, so they keep it.”