That 15% Weekly Oil Crash Isn’t Just About the Iran Deal — You’re Missing the Fed’s Hidden Hit Too

(SeaPRwire) –

By: Christian Pierce

Traders got hit with two gut punches this week. No short-term risk model fully priced the moves in. Oil benchmarks crashed 15% across six straight sessions. All gains from the three-month Strait of Hormuz closure are now wiped out. Energy buyers locked in hedges at $90+ per barrel just two weeks ago. Many of those buyers now face steep, unexpected margin calls. Small independent refiners are already sounding cash flow alarm bells.

On Thursday, Brent crude fell 2.2% to $77.82 per barrel. U.S. West Texas Intermediate dropped 2.5% to $74.88 per barrel. Both marks hit their lowest levels since March 2.

The first price trigger came from the US-Iran MOU signed this week. President Trump and Iranian President Masoud Pezeshkian agreed to a permanent end to hostilities. The deal also phases out US sanctions on Iranian oil sales over time. The Strait of Hormuz handles roughly 20% of global oil and LNG shipments. Some tankers have already resumed transits, with Iraq prepping higher export volumes. The Fed added extra pressure Wednesday, holding rates steady but signaling a possible hike later this year. Higher rates slow economic activity and cut oil demand, amplifying selling pressure. IEA data forecasts 8 million barrels per day of supply growth between 2026 and 2027. That is four times the projected 2 million b/d of demand growth over the same period. The agency projects a surplus of over 5 million b/d by 2027, a deeply bearish signal. US crude stockpiles fell 8.3 million barrels last week, softening immediate price drops. ING analysts note Iran expects swift sanctions relief, but flow normalization timelines remain uncertain. MUFG analysts add the industry remains cautious on recovery pace, even as early positive signs emerge.

The market has now fully erased the geopolitical risk premium priced in during the conflict. Near-term price drops will be limited by tight current inventories and slow sanctions rollout. Small refiners that locked in high hedges will struggle to meet margin calls through Q3. Larger integrated energy firms will use the dip to acquire distressed refining assets at steep discounts. We will not see oil cross $90 per barrel again in 2024, even if supply normalization hits unexpected snags.

Author bio: Christian Pierce, chief financial columnist and markets commentator with 12 years covering global commodity and macroeconomic trends.