Oil prices declined on June 12, 2026, following U.S. President Donald Trump's announcement that Washington had reached a framework agreement with Iran, raising hopes for a potential easing of tensions in the Middle East [1]. Trump stated from the Oval Office that he expects the agreement to be signed 'over the next few days,' and indicated that the Strait of Hormuz would reopen once the deal is finalized [1]. U.S. crude oil futures for July delivery fell 1.65% to $86.26 per barrel, while August futures for Brent dropped 1.55% to $88.98 per barrel in early Asia trading [1].
Earlier, Trump had called off a planned round of U.S. military strikes against Iran, citing that negotiations had reached the highest level of Iranian leadership and were approved [1]. However, Iranian state-affiliated outlet Fars pushed back on Trump's claim, reporting that Tehran had not approved any draft text for an initial memorandum of understanding with Washington. Fars characterized Trump's announcement as a step back from military threats and stated that the U.S. had returned to its previous demand, though it acknowledged the possibility of re-examining the text proposed by Iran [1].
BMO Capital Markets noted that oil prices have remained surprisingly contained despite the recent exchange of U.S.-Iran strikes, attributing this to ongoing diplomatic efforts, alternative shipping routes around the Strait of Hormuz, and sharply lower Chinese crude imports, which have helped offset geopolitical risks [1]. Citi echoed this sentiment, estimating that China can maintain imports near 8.7 million barrels per day without materially depleting inventories, suggesting that Chinese demand may not provide a major boost to oil prices in the near term [1].
CONCLUSION
The announcement of a U.S.-Iran framework agreement led to a drop in oil prices, though Tehran has not confirmed approval of any deal. Analysts highlight that contained oil prices are supported by diplomatic efforts and reduced Chinese crude imports, suggesting limited upside risk for prices in the near term. Market sentiment remains cautious as negotiations continue and geopolitical uncertainties persist.