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15/06/26
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WTI Oil Drops 4% on Strait of Hormuz Easing Signals
West Texas Intermediate futures fell more than 4% in European trading on Monday, slipping to about $80 a barrel as the market reacted to signs of a possible easing in tensions surrounding the Strait of Hormuz. The waterway carries close to one-fifth of global energy shipments, so any shift in access to the route typically has a strong effect on crude prices.
The latest pressure came after the U.S. president said the Strait would be reopened following a memorandum of understanding with Iran, which is expected to be signed in Switzerland on June 19. The announcement followed a sharp rise in oil prices during the early phase of the conflict, when fears grew that Iran could restrict traffic through the Strait in response to military escalation.
Despite the decline, traders remain cautious about assuming a lasting downtrend. Reports indicate that the reopening may still take up to 30 days under Iranian arrangements, while U.S. restrictions on Iran could also be lifted over the same period. That uncertainty leaves room for further volatility, particularly if negotiations prove more difficult than initially expected.
Market participants are also watching the condition of energy infrastructure across the Middle East. Damage sustained during recent exchanges involving the U.S., Israel and Iran has raised the risk of supply disruptions even if shipping lanes reopen. Analysts have suggested that this damage may keep a floor under prices, limiting the scope for a deeper selloff.
From a technical perspective, WTI remains under pressure near $80 and continues to trade well below its 20-day exponential moving average of $89. The weaker setup suggests sellers still control the near-term trend.
Momentum indicators also point to further downside risk. The relative strength index has slipped into the mid-30s, signaling that bearish pressure remains intact. If the decline extends below $79, the next support area is near $76, with additional downside levels around $70 and $68. A recovery above $89 would be needed to improve the short-term outlook.
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