WTI Crude Remains Firm Above $75 Despite Reduced Supply Risks and Expectations of Fed Tightening in 2026

• WTI crude prices could come under pressure after the United States and Iran reached a preliminary agreement to end their conflict, reducing concerns over potential supply disruptions.
• At the same time, signals from the Federal Reserve pointing to possible interest rate hikes in 2026 have reinforced expectations of tighter monetary conditions, weighing on energy prices.
• Adding to the bearish outlook, the International Energy Agency (IEA) projects global oil supply to increase by 8 million barrels per day, significantly exceeding the expected 2 million barrels per day recovery in demand by 2027.

West Texas Intermediate (WTI) crude oil prices are showing a modest recovery during Thursday’s Asian session, trading near $75.10 per barrel after posting losses for five consecutive days. The rebound comes despite easing geopolitical tensions in the Middle East and reduced concerns over potential supply disruptions.

Oil prices remain vulnerable after reports emerged that the United States and Iran have signed a preliminary agreement aimed at ending hostilities. According to the White House, US President Donald Trump and Iranian President Masoud Pezeshkian approved a memorandum of understanding designed to pave the way for a broader peace settlement. The framework follows earlier electronic endorsements by Vice President JD Vance and Iranian Parliamentary Speaker Mohammad Bagher Ghalibaf.

Initial details suggest the agreement establishes a 60-day negotiation period to finalize a comprehensive peace accord. Key provisions include the rapid reopening of the Strait of Hormuz and the immediate removal of significant sanctions on Iranian oil exports. While the deal secures a ceasefire across active conflict zones, discussions surrounding Iran’s nuclear program and long-term economic arrangements are expected to continue in the months ahead.

Meanwhile, the Federal Open Market Committee (FOMC) unanimously decided to keep the federal funds rate unchanged at 3.50%–3.75%. In his first policy meeting as Federal Reserve Chair, Kevin Warsh reaffirmed the central bank’s commitment to bringing inflation under control and restoring price stability.

However, policymakers also indicated growing support for potential rate increases later this year, reinforcing expectations of tighter monetary conditions. The prospect of higher borrowing costs weighed on energy markets, limiting oil’s upside potential.

Adding to the bearish narrative, the International Energy Agency (IEA) warned of a substantial global oil surplus by 2027 in its latest monthly report. As the market adjusts to the normalization of flows through the Strait of Hormuz, the agency expects production growth to significantly outpace demand. Supported by a strong recovery in Gulf exports and expanding non-OPEC+ output, global oil supply is projected to rise by 8 million barrels per day, while demand is expected to increase by only 2 million barrels per day, creating a sizeable supply-demand imbalance that could pressure prices over the longer term.