09:13 AM EDT, 05/15/2025 (MT Newswires) -- Oil traded sharply lower early on Thursday as the United States nears a deal with Iran to limit its nuclear ambitions while the International Energy Agency said it sees oil demand slowing while supply is on the rise.

West Texas Intermediate crude oil for June delivery was last seen down US$1.78 to US$61.37 per barrel, while July Brent crude was down US$1.81 to US$64.28.

The drop comes as U.S. President Donald Trump said the country is near a deal with Iran to check that country's plans to develop nuclear weapons. An Iranian official told NBC news the agreement will see sanctions on the country, including those on its oil exports, lifted.

The deal could see more supply coming to the market if sanctions are lifted on Iranian exports, which would come as OPEC+ readies to add a second monthly tranche of 411,000 barrels per day of production hikes as it speeds the return of 2.2-million barrels per day of production cuts.

"Crude prices fell for a second day as the tariffs pause relief rally faded after Iran showed willingness to strike a nuclear deal in exchange for sanctions relief, potentially adding to OPEC+ supply in the coming months," Saxo Bank noted.

The additional supply comes as demand is waning as global growth slows amid the tariff battles launched by the United States. In its monthly Oil Market Report released Thursday, the International Energy Agency said it sees first-quarter demand growth of 0.99-million bpd slowing to 0.65-million bpd for the remainder of the year, while raising its forecast for supply growth this year to 1.6-million bpd, up from 1.2-millon bpd April forecast.

"With the rises in global supply expected to considerably outpace demand growth, oil inventories are forecast to jump by an average of 720 kb/d this year and 930 kb/d next year, compared with a decline of 140 kb/d in 2024. This sets the stage for a further rebalancing of supply and demand fundamentals," the agency wrote.