The oil market is having a situationship with peace.

Here's what you need to know this week, and why it matters.

We have all been in, or watched a friend end up in, a situationship. The mixed signals, the almost commitment, the thing that looks like a relationship but refuses to be called one. Well, right now, the oil market finds itself in exactly that dynamic with peace. A deal is forming, but nobody will define it. The vibes are hopeful, but the future is undecided. And just when things start to feel settled, an ex walks back in and says something that throws the whole thing into doubt.

That ex is President Trump, but we will get to him.

In Issue 1 we discussed how the war between the US and Iran was pushing energy prices up, and how that worked its way into your everyday life. We wrote back then that rising energy costs “work their way into everything including your groceries, your electricity bill, and the girls’ trip that somehow costs more every time you check.” That was a world where conflict meant prices only went one direction, and that direction was up.

Now the script has flipped. Oil is sitting near its lowest level in three months, and the reason is that a deal is in process. There is a developing ceasefire between the US and Iran, formalized in something called a Memorandum of Understanding, or MoU. An MoU is a preliminary agreement that sets out the framework for a possible permanent truce. This one extends an earlier ceasefire from April by another 60 days. With the threat of war easing, the panic that drove oil prices higher is wearing off, and prices have come down with it.

So why did oil rise this week if the bigger story is falling prices? Here is where Trump comes back in.

On Wednesday, he said the deal is not final, and that he could resume the bombing if he did not like it, or if Iran did not, in his words, “behave.” And if that is not textbook controlling-ex chaos, nothing is. That single comment was enough to push Brent crude, the international benchmark price for oil, up nearly 1% to $79.68 a barrel. US oil rose too, but both are still sitting near their three-month lows. The market got a reassuring text, then a confusing one, and ended up roughly where it started. This was a reaction, not a reversal. The price moved because of what Trump said, not because anything structural had changed.

But underneath all the back and forth sits a much bigger and quieter story.

The International Energy Agency, or IEA, is the organization that tracks and forecasts global energy markets. Think of it as the OECD equivalent, but specifically for energy. This week it published its first look at 2027, and the numbers are significant. Global oil supply is expected to surge by 8 million barrels per day, while demand grows by only 2 million.

Before we go further, a quick economics reminder. When supply is greater than demand, prices fall, and when supply is less than demand, prices rise. So with supply expected to exceed demand by 6 million barrels and basic economics tells us where prices are headed. Lower.

But here is what makes this more than just a short-term dip. A geopolitical shock, like a presidential threat or a single headline, can push oil prices up for a day or a week, but once the noise fades, prices tend to drift back. A supply surplus works differently. When the world is producing significantly more oil than it is consuming, day after day, month after month, that excess builds up and sits in storage. It does not disappear on its own, and until demand catches up or production slows down, the pressure on prices does not go away. That process does not happen in days. It takes years. This is why Crispus Nyaga, research analyst at Empire FX, warned this week that markets may be underpricing just how deep this surplus could go.

Now you might be wondering that if oil prices are falling, is that not actually good news?

And the honest answer is yes, eventually. Lower oil means lower energy costs, which eases inflation, which gives central banks like the Federal Reserve more room to cut interest rates. When rates come down, borrowing gets cheaper, businesses invest more, and the economy gets a little more room to breathe. That is a genuinely positive chain reaction, and it is the direction this story is pointing. But markets are not celebrating that today, and here is why. A benefit that depends on an unfinished peace deal does not get priced in on the same morning someone threatens to blow that deal up. What markets can see right now is uncertainty, and uncertainty is what is driving behaviour today. The good news is structural and long-term. The caution is immediate and real.

This is what makes the situationship so hard to read. From below, there is structural downward pressure with peace deal forming and a wave of new supply on the way. From above, there is a fragile floor with a president who could restart a war with one announcement. The result is a market that jumps and dips on headlines while the bigger trend quietly points down. The word that matters most right now is eventually, because just like any situationship, nothing here is defined yet. The sections that follow break down what is real, what is noise, and what all of this means for your money.

What’s moving in markets

Oil is the entire story this week, and it is being pulled in two directions at once. Brent crude rose 0.9% to $79.68 and US oil rose 0.8% to $76.66, but both touched their lowest levels since early March during the session. The bounce came from Trump’s threat to resume bombing. The weakness underneath came from the developing ceasefire and the IEA’s warning of a major supply surplus ahead.

The US dollar tends to find mild support in weeks like this. When uncertainty rises, as it did the moment Trump reopened the possibility of war, investors lean toward the safety of dollar-denominated assets. This is a reliable pattern we have seen in previous issues, and it is worth noting as structural context.

Petrocurrencies are the quiet losers of a falling oil price. Currencies of major oil-exporting economies, such as the Canadian dollar and the Norwegian krone, tend to weaken when oil revenues shrink. Lower oil means lower export income for these countries, which reduces demand for their currencies. This is background context, not a figure from this week’s article, but it is the natural consequence of the price move.

Energy company shares face pressure when oil settles structurally lower, because their revenues are tied directly to the price of what they sell. Trump’s threat offers a temporary floor for the sector, but a one day bounce is not the same as a reversal. The IEA’s supply outlook is the more important signal for anyone holding energy stocks.

Currency & interest rate

How it all connects

Iran-US ceasefire forms → anticipation of supply returning → oil prices fall toward 3-month lows → Trump threatens to resume bombing → uncertainty spikes → oil bounces on the session → IEA forecasts a 6 million barrel supply surplus for 2027 → structural downward pressure remains

What makes this situation genuinely difficult to read is that the usual relationship between conflict and oil has been turned upside down and then split in two. Normally the story is simple where war pushes oil up, peace brings it down. Right now, both are happening at once. A peace deal is forming, which should push prices down, and it is. But the peace is so fragile that the person who could break it keeps reminding everyone he might. So the market gets a falling trend with sudden upward jumps and neither force has resolved the other. This is why a single comment can move the price while changing nothing about the bigger direction.

The deeper reason the downward pressure is so hard to ignore is that it is no longer just about Iran. The IEA’s 2027 forecast describes a world awash in oil, with far more supply than demand. A geopolitical risk premium, meaning the extra price markets add because of conflict fears, can disappear quickly once tensions cool. A structural supply surplus is much stickier, because it takes years for that much new oil to be absorbed. That is the quiet message under this week’s noise. The headlines are about Trump and Iran, but the number that may matter most is the one the IEA published.

Why this matters to you

The broader market picture

Markets are in a cautious, risk-off mood this week, meaning investors are leaning toward safer assets while the Iran situation stays unresolved. The underlying trend in oil is now downward, which is the first piece of genuinely good news for inflation in a while. The catch is that none of it is locked in. The deal is not final, the supply surplus is a forecast rather than a fact yet, and one announcement could send prices spiking again. This is a week to understand which direction you are exposed to, not a week to assume the relief is permanent.

For your business or portfolio

• If you are an importer: Lower energy costs are a quiet positive for your input bills. Check that your existing currency hedges still make sense in a world where oil trades near $80 rather than spiking.
• If you are an exporter: Mild dollar strength from the risk-off mood may offer a slightly better rate if you hold dollar receivables. Worth reviewing your timing before the picture shifts again.
• If you are a borrower: No rate relief has arrived yet. Keep an eye on the Fed’s rate decision today.
• If you are an investor: If you hold energy exposure, ask whether your positions account for a structurally lower oil price into 2027. The IEA’s supply forecast is the single most important data point for that sector this week.