WTI tumbles below $80 as Hormuz deal hopes erase risk premium

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WTI tumbles below $80 as Hormuz deal hopes erase risk premium

Diplomatic outcome remains uncertain

Optimism may be premature because Tehran denies holding direct negotiations with Washington, saying that discussions with Oman are focused on maritime security. A cargo vessel was also reportedly struck near the Omani coast, highlighting the continued threat to regional shipping. WTI could therefore rebound quickly if the anticipated agreement fails or military escalation resumes. Any credible reopening of the strait, however, would allow more Gulf supply to return to the global market and reinforce downward pressure.

US inventories provide limited support

The latest EIA report showed that US commercial crude inventories fell by 7.2 million barrels to 404.5 million in the week ended July 24, far exceeding expectations for a modest decline. Stocks were around 7% below the five-year seasonal average, while refinery utilization reached 97.2%. US production remained close to 13.8 million barrels per day. The substantial draw points to a relatively tight domestic balance, although geopolitical developments currently have a much stronger influence on prices. The next EIA release will show whether the decline in inventories continued. US Energy Information Administration

Supply recovery challenges demand outlook

OPEC+ plans to increase production by 188,000 barrels per day in September, adding to expectations of improving supply availability. Meanwhile, US manufacturing activity strengthened in July, but elevated fuel prices and weaker consumption in parts of Asia continue to constrain global demand. The EIA expects global inventories to fall during the third quarter before returning to substantial builds in the fourth quarter as Middle East production and exports recover. Its July outlook projects Brent falling toward an average of $70 in Q4, implying additional downside risk for WTI. EIA Short-Term Energy Outlook

Breakdown weakens technical structure

The hourly chart shows a decisive break below $80 after the recovery stalled near $82.50. WTI is now trading beneath all major moving averages, confirming that sellers have regained short-term control. A failure to reclaim $79.50–80.00 would preserve risks of a decline toward $77.00–76.00, followed by $75.00. Resistance is located at $80.00–81.00 and $82.00–82.50. As I warned in WTI crude retreats as OPEC+ supply boost and Iran diplomacy cool risk premium, only a sustained return above the latter zone would reduce the immediate bearish pressure and open the way toward $84.00.

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