Oil rises 1% on US-Iran deal doubts; IEA warns of supply glut

LONDON/BANGALORE - Oil prices rose more than 1% Wednesday after U.S. 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%, to $79.89 a barrel at 1308 GMT, and U.S. West Texas Intermediate gained 79 cents, or 1%, 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 U.S. 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 U.S. 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.

U.S. 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. [EIA/S]

(Additional reporting by Yuka Obayashi in Tokyo and Jeslyn Lerh in Singapore. Editing by Alexander Smith, Kirsten Donovan and Mark Potter)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published June 17, 2026 at 6:15 AM.