The prospect of renewed negotiations on the Iran nuclear agreement has sent oil prices sharply lower, following recent remarks by former President Donald Trump.
Warren Patterson, Head of Commodity Strategy, and Eva Mancey, Commodity Strategist at ING, report that Trump’s statement indicating progress toward a U.S.-Iran nuclear deal sparked a swift reaction in the oil markets. The potential lifting of sanctions would remove a long-standing supply risk, enabling Iran to boost its oil output and attract additional buyers. Analysts estimate this could increase daily global oil supply by approximately 400,000 barrels.
This development comes amid ongoing supply increases from OPEC+ countries, raising concerns about potential oversupply. Market sentiment is also weighed down by doubts over future demand. The International Energy Agency’s (IEA) latest monthly oil market report reflects these worries, forecasting a slowdown in global oil demand growth from 990,000 barrels per day in Q1 2025 to 650,000 barrels per day for the remainder of the year. This translates to an annual demand increase of 740,000 barrels per day in 2025, attributed to economic headwinds and rising electric vehicle sales. The IEA projects demand growth to pick up slightly to 760,000 barrels per day in 2026.
On the supply side, the IEA expects production to rise by 1.6 million barrels per day in 2025 and by 970,000 barrels per day in 2026. The recent price drop led the IEA to revise down its forecasts for U.S. supply growth over the next two years.
In natural gas markets, U.S. futures fell sharply, with Henry Hub closing down 3.7%. The U.S. Energy Information Administration reported a weekly inventory build of 11 billion cubic feet, in line with expectations but above the five-year average increase of 8.3 billion cubic feet. Total U.S. natural gas stocks stand at 2.255 trillion cubic feet, down 14.3% year-over-year but still above the five-year average.
In agricultural news, the Rosario Board of Trade revised Argentina’s 2024/25 soybean production estimate upwards to 48.5 million tonnes, up from a prior forecast of 45.5 million tonnes. The revision is attributed to higher yields in the Pampas region. Corn production estimates remain steady at 48.5 million tonnes. Meanwhile, improved soil moisture conditions since late February have led to expectations of a 4% increase in wheat planting area for 2025/26, reaching 7.2 million hectares—the highest in 15 years. If yields return to historical averages, wheat output could reach 21 million tonnes.
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