Oil Slips on Hormuz Talks, Supply Risks Remain
Oil fell Thursday as Hormuz talks eased geopolitical risk, but flows remain at 25% of pre-war levels. Diesel shortages and triangle patterns leave WTI and Brent volatile.
Oil prices fell Thursday after diplomatic efforts involving Iran, Oman and Qatar raised hopes for eased Strait of Hormuz restrictions. Brent crude settled at $88.50 a barrel. WTI crude settled at $81.60.
The talks reduce the immediate geopolitical risk premium, but the flow through the Strait of Hormuz remains at about 25% of pre-war levels, according to the analysis. Iran and the United States are still far apart on conditions for reopening the waterway.
Disruptions to Middle East refineries and Ukrainian attacks on Russian refineries have cut global diesel output. U.S. distillate inventories dropped 2.2 million barrels last week to a record seasonal low of 103.4 million barrels, the data showed. Those shortages could keep crude prices volatile until a clear agreement emerges, the analysis said.
On the daily chart, WTI crude has pulled back from resistance near $87, defined by a descending trend line of a triangle pattern. The price remains above the 50-day and 200-day simple moving averages. A break below $77.50 would expose the triangle support near $72, the analysis said. A break above $87 would target $93.
Brent crude is also consolidating in a triangle pattern. A break above $95 would target $101, while a break below $86 would open the way to $76, the analysis said.
Technical indicators on the four-hour chart show the RSI has entered oversold territory, pointing to a potential rebound toward $86 for WTI, the analysis said. Uncertainty remains high until prices break above the descending trend line from the April highs.
The weekly chart shows a strong surge from $67 to $120 after the Iran war and then a drop back toward $70. The price needs to break below $80 or above $100 to define the next directional move, the analysis said.
Diplomatic negotiations ease near-term supply disruption fears, but low flows through the Strait of Hormuz and tight diesel inventories keep the risk of supply shocks elevated. The short-term direction for both WTI and Brent remains uncertain until the market breaks these key levels.
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