Oil Remains Weak as De-escalation Hopes Grow, Trump Faces Constraints

Market Fundamentals

Oil prices declined further on Tuesday as expectations of a diplomatic resolution mounted prior to President Trump's discussions with Gulf leaders and possibly Iranian President Pezeshkian at the UN General Assembly.

Additionally, the Financial Times reported on Tuesday that Gulf governments have urged a fresh start in ties with Tehran. The UAE is advocating a "new mindset," while Qatar supports a regional "security framework" with Iran. This follows a conflict that left Gulf states exposed to Iranian strikes and weakened their confidence in the US security umbrella.

At a UN General Assembly side event, Qatar's prime minister described the war against Iran, initiated by the US and Israel in February, as a "wake-up call." He said the Gulf must "act responsibly as a region and have good relations with Iran." He added that efforts toward that aim are ongoing and regional partners share that belief.

These comments strongly indicate that Gulf leaders are tired of the war with Iran and seek its end. They also point to an emerging de-escalation phase, with markets already positioning for such an outcome. The Pentagon confirmed last week that the US faces a shortfall in strategic munitions, adding to the constraints pressing Trump to conclude the conflict.

Naturally, a diplomatic resolution would drive oil prices substantially lower by easing supply fears, whereas an escalation could trigger a sharp rally, potentially pushing WTI above $100 again.

Technical Analysis – Daily Chart

On the daily chart, crude oil (CFD) briefly dipped below the 93.00 support zone on Tuesday but recovered to close above it. Buyers are likely to keep defending that area, using a stop below it, aiming for a rebound toward the 105.00 resistance. Sellers, in contrast, will seek a move below to expand bearish positions targeting the channel's lower boundary near 85.00.

Technical Analysis – 4-Hour Chart

The four-hour chart shows a downward trendline that defines the bearish momentum. Any pullback is expected to attract selling at that trendline, with a stop placed above it, as sellers continue to push toward new lows. Buyers, meanwhile, want a breakout higher to increase long exposure with a target of 105.00 resistance.

Technical Analysis – 1-Hour Chart

The one-hour chart features a minor upward trendline that defines the current pullback. Buyers are expected to keep leaning on this trendline, with a risk below it, to drive price toward the four-hour trendline. Sellers will look for a break lower to initiate short positions and push the market to fresh lows. The red lines mark today's average daily range.

Upcoming Catalysts

Later today, Trump is set to meet with Gulf leaders and potentially with Iran's president at the UN General Assembly. Flash US PMI figures are due tomorrow, followed by a Trump-Xi meeting on Thursday.