After more than three months of fighting and intermittent negotiations, Washington and Tehran now appear, according to reports, to be on the verge of reaching an agreement that would bring their conflict to an end. However, according to sources in Washington, Tehran, and London who spoke exclusively to OilPrice over the past few days, the political and military drama of recent weeks may ultimately end as a loud story with limited practical consequences.

A Washington-based source working closely with legal operations at the US Treasury Department told the website over the weekend: “There is a very strong chance that the United States will end up with an agreement that looks remarkably similar to the Joint Comprehensive Plan of Action (JCPOA), commonly known as the Iran nuclear deal, although we may lose a little while Iran gains a little.”

But what are the prospects for the expected peace agreement? And what could happen to energy prices afterward?

US war objectives

From the American perspective, President Donald Trump identified four primary objectives from the outset of the war against Iran and its proxies in February, all of which received full backing from members of his administration at the time.

The first objective was to prevent Iran from acquiring a nuclear arsenal.

The second was to destroy or weaken Iran’s missile stockpiles and production capabilities.

The third was regime change.

The fourth was to end Tehran’s financing and arming of its regional proxies.

So how much progress has been made toward these goals?

Iran’s nuclear program

Regarding the nuclear program—the most important objective for Washington—the US Department of Defense announced that the Fordow Fuel Enrichment Plant had been rendered “inoperable.”

The above-ground enrichment facility at Natanz was also said to have been “completely destroyed,” while the underground laboratories suffered what were described as “extensive” damages.

The same applies to the Isfahan Nuclear Technology Center, which serves as a key hub for converting uranium into the gas required for enrichment activities.

However, up to 440 kilograms of uranium enriched to 60%, which the International Atomic Energy Agency lost track of last year, remains unaccounted for.

The agency also acknowledges that it does not know the full scope of Iran’s current activities, particularly at undisclosed sites.

Missiles and military capabilities

As for the second objective, US intelligence assessments indicate that roughly 70% of Iran’s pre-war ballistic missile stockpile remains intact.

At the same time, around 70% of its missile launchers have reportedly been destroyed.

Strikes targeting Iran’s Defense Ministry and military logistics facilities also destroyed 15 major weapons production sites linked to the development of advanced ballistic missiles.

Iran’s manufacturing capabilities were further eroded following US and Israeli attacks on three major steel plants in Mobarakeh, Khuzestan, and Sefid Dasht.

Nevertheless, US intelligence officials warned earlier this month that Iran’s defense industrial base is recovering faster than expected, aided by components supplied through covert networks originating in China.

Regime change

As for the third objective—regime change—Trump could argue that it was partially achieved through the elimination of former Supreme Leader Ali Khamenei and dozens of senior religious, political, and military figures in strikes carried out in coordination with Israel.

Despite that, Iran’s hardline Islamic system remains intact and continues to enjoy strong support from the Islamic Revolutionary Guard Corps, the ideological guardian of the 1979 revolution.

Dismantling the proxy network

The fourth objective has arguably seen the clearest success so far.

Operation “Epic Wrath” reportedly dismantled the command structure linking Tehran to its network of armed groups across the region.

The deaths of several key leaders transformed those groups into more independent regional actors rather than a coordinated and unified front.

According to US Central Command, Iran’s ability to use its proxies as a tool of regional power has suffered a major blow.

Trump and political considerations

“There are enough achievements here for the president to claim some form of victory to his supporters, allowing him to strike a deal that has become increasingly important with the approach of the November midterm elections,” the US source said.

Although Trump is legally barred from seeking another presidential term, he may still seek to preserve his family’s political influence in the future, which would require continued support from the Republican Party.

For that reason, he is closely watching the party’s electoral prospects and understands the direct relationship between energy prices, the US economy, and election outcomes.

Oil and elections

With gasoline prices remaining above $4 per gallon in the United States, historical data suggests that every $10-per-barrel move in crude oil prices typically translates into a change of roughly 25 to 30 cents per gallon at the pump.

Furthermore, every one-cent increase in average gasoline prices reduces annual consumer spending by more than $1 billion, weighing on economic growth.

The political significance is considerable. Since 1896, incumbent US presidents have won re-election 11 out of 11 times when the economy was not in recession during the two years preceding the election.

By contrast, incumbents facing elections during a recession succeeded only once in seven attempts.

A similar pattern applies to midterm elections.

Iran’s position

The challenge for the US negotiating team is that Tehran believes it cannot defeat the United States in this war, but it also does not believe it will be defeated.

Iran’s leadership and population have grown accustomed to the economic and political hardships resulting from more than four decades of international sanctions. As a result, continued pressure is not viewed as a decisive factor.

At the same time, the possibility of reaching an agreement that improves daily life for Iranians makes patience an acceptable strategy.

“We must remember that this time Iran holds a genuine bargaining chip through its continued control of the Strait of Hormuz, which is why it is seeking a better deal than the nuclear agreement reached during the Obama administration,” the US source added.

Bigger demands than the 2015 deal

A senior source working closely with Iran’s Oil Ministry said Tehran’s demands from Washington will be significantly greater than they were in 2015.

“We are now talking about tens of billions of dollars in compensation for war-related damages, although in the United States it will likely be presented under a different label, perhaps as an investment fund,” he said.

“In return, Iran will take its time implementing its commitments because the Revolutionary Guard believes that any peace agreement with Trump could simply be a way to maintain calm until the midterm elections and then resume the conflict afterward.”

What happens to oil prices?

If a peace agreement is signed and appears sustainable, a period of two to four weeks should be sufficient to begin clearing the bottlenecks that have built up in the Gulf and restoring normal shipping patterns.

A further two to four weeks may then be required for flows to return fully to normal levels, according to Vikas Dwivedi, Global Energy Strategist at Macquarie Group.

Under this base-case scenario, where markets become convinced that the agreement is genuine and sustainable, he expects a sharp and immediate selloff in oil.

“We expect a decline of around $20 per barrel within just one week,” Dwivedi said.

He added that this would likely be followed by two weeks of relative stabilization, before the market begins repricing logistical and financial factors.

“After that, we expect the market to find itself facing a significant supply surplus once again, as alternative sources remain available and oil flows through the Strait of Hormuz resume, potentially leading to an overshoot to the downside.”

He concluded: “Ultimately, we expect prices to return to levels more consistent with supply and demand fundamentals, settling within what we view as a fair-value range of $65 to $70 per barrel.”

Copper prices approached the $14,000-per-ton mark, while aluminum climbed to its highest level in more than four years, supported by ongoing tensions in the Middle East and growing optimism about the strength of global demand.

Base metals have started June on a strong footing, driven by expectations of tighter global supplies. Aluminum supply is facing increasing pressure as the United States struggles to reach a resolution to the conflict with Iran, while copper traders are bracing for a potentially decisive tariff decision from US President Donald Trump's administration.

Prices are also benefiting from growing bets on artificial intelligence-related assets and the energy transition. Tin, which is used in electronics soldering, jumped as much as 3.7% to $58,750 per ton, approaching record highs.

HSBC analysts said in a research note: “Metal prices are generally experiencing a rally driven by supply disruptions for some commodities due to the conflict in the Middle East, alongside strong structural demand.”

They added that commodity markets are facing what they described as “extreme supply pressure” as the Strait of Hormuz remains closed.

Optimistic forecasts from financial institutions

The gains followed a series of bullish forecasts from major financial institutions.

Goldman Sachs raised its year-end copper price forecast by more than 10% in a note issued earlier this week.

Meanwhile, Citigroup said last month that the aluminum market is experiencing the most favorable supply-demand conditions in at least half a century.

In another sign of tightening market conditions, spot aluminum contracts traded at a premium of $116.50 per ton over three-month futures on June 2, the largest premium since 2007.

Middle East conflict keeps markets on edge

Investors continue to closely monitor developments in the Middle East.

President Donald Trump remains optimistic that the United States could soon reach a temporary peace agreement with Iran, despite Tehran's threat to suspend negotiations due to escalating Israeli attacks in Lebanon.

The ongoing conflict is adding further uncertainty to future aluminum supplies from the region, which accounted for roughly 10% of global production before the war began.

Some copper production could also face disruptions if restrictions on sulfuric acid flows from the Middle East persist, as the material is a key input in copper production.

Price performance

As of 12:17 p.m. London time:

Aluminum rose 1.3% to $3,765 per ton, bringing its gains since the start of the year to more than 25%.

Copper advanced 0.9% to $13,962 per ton, moving closer to the $14,000-per-ton level.

Bitcoin (BTC) fell below the $70,000 level on Tuesday for the first time in two months, as sellers continued to dominate the market.

Data from TradingView showed Bitcoin dropping to an intraday low of $69,631 on the Bitstamp exchange.

After failing to keep pace with gains in equity markets, Bitcoin widened its performance gap versus other risk assets, declining around 2% on the day.

The drop inflicted significant losses on bullish traders, with total liquidations across Bitcoin and altcoin positions approaching $800 million over the past 24 hours, according to CoinGlass data.

The cryptocurrency has lost roughly 4% over the past 24 hours and remains more than 44% below its all-time high above $126,000, reached in late 2025.

US President Donald Trump said on Monday that talks with Iran remain ongoing despite reports suggesting Tehran had suspended indirect negotiations with Washington aimed at ending hostilities, a development that contributed to a modest decline in oil prices.

Investors continue to treat any signs of progress toward ending the US-Israeli conflict with Iran cautiously, given the fragile ceasefire agreement reached between Washington and Tehran in early April.

Likewise, Lebanon’s announcement on Monday of a limited ceasefire between Iran-backed Hezbollah and Israel failed to provide meaningful momentum to financial markets.

Markets focus on US economic data

Later today, the US Department of Labor is scheduled to release job openings data ahead of Friday’s closely watched monthly employment report, as markets continue to price in the possibility that the Federal Reserve’s next move could be a rate hike.

Economists surveyed by Reuters expect Friday’s report to show that the US economy added 85,000 jobs in May, while the unemployment rate is projected to remain unchanged at 4.3%.

Mounting pressures push prices lower

The sharp correction has been driven by a combination of factors, including fresh on-chain supply pressure, symbolic selling activity by major corporate holders, and continued macroeconomic headwinds.

Together, these factors have rapidly eroded investor confidence, turning what initially appeared to be a consolidation phase into a decisive break below key support levels.

This triggered an accelerated wave of forced liquidations, with more than $767 million wiped out from leveraged positions over the past 24 hours. Stop-loss orders were also activated across the market, intensifying selling pressure throughout the cryptocurrency sector.

What is behind the decline?

Bitcoin’s latest drop below $70,000 was driven by fresh supply concerns stemming from wallet transfers linked to Mt. Gox, along with a symbolic sale by Strategy Inc. involving 32 Bitcoin.

These developments revived fears of additional supply entering the market and dealt a blow to the long-standing “never sell Bitcoin” narrative that had enjoyed strong support among corporations and institutional investors, further fueling bearish sentiment and accelerating downside momentum.

Strategy records its first Bitcoin sale since 2022

Strategy Inc. disclosed that it sold 32 Bitcoin between May 26 and May 31 for approximately $2.5 million, at an average price of about $77,135 per coin, according to a filing submitted to the US Securities and Exchange Commission (SEC) on June 1.

The company said the proceeds were used to fund preferred stock dividend payments.

Although Strategy still holds more than 843,000 Bitcoin, the transaction — small in size but significant in symbolism — challenged the narrative long promoted by its former CEO and prominent Bitcoin advocate, Michael Saylor, that the company would “never sell Bitcoin.”

The news added to negative market sentiment and coincided with widespread unwinding of leveraged positions, increasing pressure on prices and contributing to Bitcoin’s continued decline.

Oil prices declined on Tuesday, giving back part of the strong gains recorded in the previous session, as Iran reviewed a proposed US agreement aimed at ending the conflict between the two countries, according to Iran’s Mehr News Agency.

Brent crude futures fell by $1.13, or 1.2%, to $93.85 per barrel by 11:30 GMT, while US West Texas Intermediate crude dropped $1.09, or 1.2%, to $91.07 per barrel.

Both benchmarks had surged more than 5% on Monday after posting losses exceeding 16% during May, driven by market optimism over the possibility of a peace agreement.

US President Donald Trump said on Monday that negotiations with Iran remain ongoing and expressed confidence that an agreement could be reached next week to extend the ceasefire and reopen the Strait of Hormuz.

A source cited by Mehr News Agency said that Iran has not yet responded to the final draft of the proposed temporary agreement.

Focus shifts to the Strait of Hormuz and oil inventories

Despite developments in the negotiations, Giovanni Staunovo, an analyst at UBS, noted that oil flows through the Strait of Hormuz remain constrained due to the ongoing conflict in the region.

Separately, the head of the oil industry and markets division at the International Energy Agency warned on Tuesday that global oil inventories could fall to critically low or historically tight levels ahead of peak summer demand if current stock drawdowns continue.

An executive at the Abu Dhabi National Oil Company also suggested that August could mark a turning point toward higher oil prices if demand recovers while supply disruptions linked to the conflict with Iran persist.

Tim Waterer, Chief Market Analyst at KCM Trade, said that the market is currently focused on whether negotiations between Washington and Tehran produce tangible progress or setbacks, as well as on the tone of statements issued by both sides, particularly Iranian threats regarding the Strait of Hormuz and actual tanker traffic through the waterway.

He added that the direction of negotiations will determine whether the current geopolitical risk premium remains embedded in oil prices or begins to fade.

Major disruption to global energy flows

Since the outbreak of the conflict, Iran has effectively imposed restrictions on most non-Iranian shipping entering and leaving the Gulf, disrupting roughly one-fifth of global oil and liquefied natural gas flows and driving prices more than 50% higher.

At the same time, the United States continues to maintain a blockade on Iranian ports.

Lebanon announced a partial ceasefire between Hezbollah and Israel on Monday, representing a limited de-escalation within the broader conflict that helped ignite the wider war involving Iran.

US inventories expected to decline

According to a preliminary Reuters survey, US crude oil inventories are expected to have fallen by approximately 3.6 million barrels in the week ending May 29, extending the decline recorded in the previous week.

Gasoline and distillate inventories are also expected to have decreased.

Fresh escalation in Ukraine

In a separate development, Russia launched large-scale attacks on Ukrainian cities early Tuesday using hundreds of drones and dozens of missiles. Ukrainian authorities said the strikes killed 18 people and injured more than 100 others.