Oil slide halts as Trump dampens hopes for early end to conflict

FUNDAMENTAL OVERVIEW

Crude oil fell further on the previous session following a Kyodo report that Iran offered to resume passage through the Strait of Hormuz within seven days if the United States lifted its blockade of Iranian ports and halted military operations near the strait. The proposal was said to have been relayed to Washington via intermediaries as diplomatic efforts intensified around the UN General Assembly. Reuters later confirmed that report.

After Saudi Arabia reportedly prepared to restart crude exports from the Red Sea terminal at Yanbu, oil prices continued to decline. Saudi Aramco is said to have notified several Asian refiners that crude would soon be available again for loading at Yanbu.

Fars News disputed the reports that Iran had offered to reopen the Strait of Hormuz under conditions, but IRIB news later verified them after US Special Envoy Steve Witkoff held talks with the Iranian delegation in New York. The discussions were characterized as constructive and promising, and Trump stated that another session was set for the near future.

The timeline for a resolution to the conflict is still unclear, and Trump dampened hopes for a quick conclusion by reiterating that a US deal with Iran would come after the November election. That may cause a pullback in oil prices, I believe, as traders cut short positions while waiting for more clarity.

Trump currently faces numerous constraints, making an end to the war probable, though the timing is the main uncertainty. If de-escalation persists and markets anticipate a swift conclusion, oil prices are likely to keep falling. Alternatively, if the US-Iran talks collapse and tensions rise again, WTI crude could rapidly climb back above $100 and weigh on risk appetite.

CRUDE OIL TECHNICAL ANALYSIS – DAILY TIMEFRAME

Crude oil broke below the major support zone around 93.00 and continued to drop under 90.00. The natural downside target for sellers is the lower channel boundary near 85.00.

If that level is reached, buyers are expected to enter with a defined risk below the trendline to bet on a rally to new highs. Sellers will be looking for a break lower to add bearish positions, with the next support at 68.00.

CRUDE OIL TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

A downward trendline defines the bearish momentum. In the event of a pullback, sellers are expected to use the trendline as resistance with a defined risk above it to push for new lows. Buyers will look for a break above the trendline to aim for a rally back to the 105.00 resistance.

CRUDE OIL TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

Price is consolidating near the lows. Buyers want to see a break above the 90.40 swing high to target a pullback to the 93.00 resistance. Sellers are waiting for a break below the 88.70 low to extend the move down to the lower channel boundary.

UPCOMING CATALYSTS

The Flash US PMIs are due on today's calendar, and the Trump-Xi meeting is scheduled for tomorrow. The direction of US-Iran talks will remain the key focus.