WTI rebounds toward $88 as hopes for a swift Iran deal fade
WTI is recovering toward $87.90 per barrel on November 11 after a sharp decline from highs of $105–106, attempting to halt the downtrend that accelerated amid expectations of a diplomatic resolution to the conflict in the Middle East. On the 4H chart, oil is up around 0.6%, having rebounded from local lows at $85–86 and once again approached previously broken support at $88, which now acts as the nearest resistance.
Washington's restraint triggers a sharp market reversal
The main reason for today's recovery has been fading hopes of a swift agreement between Washington and Tehran. Yesterday, statements from the U.S. administration indicating its reluctance to expand military operations against Iran triggered widespread selling: Brent fell below $90 for the first time since late August, while WTI closed the session at $86.04, losing around 0.9%.
Tehran's position restores part of the geopolitical risk premium
However, subsequent statements by Iranian officials denying that negotiations were taking place between the two sides prompted investors to reassess the likelihood of an imminent end to the conflict. Additional tensions arose from Tehran's refusal to agree to the removal of enriched nuclear materials from the country, while Washington considers the nuclear program one of the key issues in any potential agreement.
As a result, part of the geopolitical risk premium that had rapidly disappeared from oil prices earlier this week began to return. However, the nature of today's move suggests a reassessment of overly optimistic diplomatic expectations rather than the beginning of a new sustained uptrend.
Resistance at $87.20 tests the recovery's strength
Thus, a break above resistance near $87.20 could lead to a rise toward $90.00. However, as long as the U.S. delays further strikes against Iran, a sustained and prolonged rally, appears unlikely, so bulls, as I already warned in WTI remains under pressure as $84.50 support faces a critical test, should exercise every possible precaution.
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