The current mood in the oil market is like an uncertain roller coaster. After investors breathed a sigh of relief with the news of peace talks yesterday, today reality hit back.
The hope that the “war premium” would simply disappear seems premature. The market is now struggling with doubts, will peace really be achieved, or are we looking at a “bull trap” that will trap those who are overly confident that prices will plummet?
Yesterday’s selling momentum has stopped, and now buyers are starting to look for opportunities amid the renewed uncertainty.
Diplomatic Drama: Between Hope and Reality
Brent crude oil surged back above $105 while WTI approached $97 after statements from Washington and Tehran cooled hopes for peace. When Trump said it was too early for direct negotiations and Iran considered the US offer just a “dream list,” the market continued to react aggressively.
Traders are starting to realize that the draft agreement is not a final solution. This is important because as long as the nuclear issue and the opening of the Strait of Hormuz are not resolved, the risk of supply disruptions remains a ghost that haunts the market.
Supply is Decreasing, US Stocks Are Shrinking
Behind the war news, there are deeper fundamental factors at play. US crude oil stocks fell by 2.3 million barrels, a clear sign that demand is eating into existing supplies.
Even if peace is achieved tomorrow, supplies will not recover overnight. The process of restoring oil flow from the Middle East Gulf to refineries will take weeks. Traders now expect prices to remain high because the “summer season” has arrived, and the market does not have enough additional supply to meet the surge in demand.
MARKET TECHNICAL STRUCTURE
Based on the current market structure, the price bias still tends to be Bullish as long as the key support zone is not broken.
Current Bias: Consolidation with an upward bias (Bullish Bias).
Key Levels (Brent): The $80 area is a very strong floor. As long as the price holds above this level, the long-term bullish structure is intact.
Reaction Zone: Watch the $90 level. This is the zone where buyers are coming back in. If the price fails to hold here, we may see a deeper correction.
The $120 level is the “ceiling” price that determines the next direction. If Brent manages to break through this level, the space for $125 – $135 will be wide open.
MARKET EXPECTATIONS
Negotiations Fail / Tensions Rise
If the 48-hour period given by the US expires without a positive response from Iran, the market will panic again. This tension would normally cause investors to rush to the USD as a safe haven, but oil will rise even more sharply due to supply concerns in the Strait of Hormuz.
Official Peace Deal Signed
If a miracle happens and a deal is signed, we will see the “war premium” removed from oil prices. Oil may fall to test the $80 – $85 zone, but this fall may be limited due to the still tight supply fundamentals.
Traders’ Main Focus
48-Hour Negotiations Dateline: All eyes are on Iran’s response to the US proposal. This is a key determinant of oil prices.
EIA Inventory Data: Traders await further confirmation on whether the US inventory drawdown continues. If inventories continue to fall, oil prices will find strong support despite the peace news.
