After a sharp surge above $100 per barrel, WTI crude has entered a correction phase and is ending the week near $90. The main driver behind the decline is growing expectations of a potential agreement between the United States and Iran, along with signals pointing to an extension of the de-escalation framework around the Strait of Hormuz.
The market has begun actively pricing out the geopolitical premium that had previously pushed prices higher amid fears of a major supply disruption from the Persian Gulf. Over the week, WTI has lost more than 14%, marking one of the steepest declines in recent months.
Pressure builds on expectations of supply recovery
Investors are increasingly betting on a gradual normalization of oil logistics and a reduced risk of a full-scale energy crisis. Despite ongoing regional tensions, the market is already factoring in a scenario where part of Iran’s oil supply returns to the global market. Additional pressure comes from expectations of a more balanced supply outlook in the second half of the year, especially if OPEC+ continues to moderately increase production.
Fundamental support prevents deeper decline
At the same time, the market is not yet ready to confirm a full bearish reversal. Recent EIA data showed a fifth consecutive weekly draw in U.S. crude inventories, while gasoline stocks continue to decline amid rising seasonal demand. Market participants also note that the physical market remains relatively tight, and supply disruptions have not been fully resolved. This is why the current sell-off appears more like a correction following an overheated rally rather than the start of a sustained downtrend.
Key scenario: high volatility to persist
For the coming weeks, the base case is WTI trading within a wide $85–95 per barrel range. If diplomatic progress between Washington and Tehran is officially confirmed, the market may test the lower bound of this range. However, any new incidents in the Strait of Hormuz or a breakdown in negotiations, as noted in the article WTI rebounds as Middle East tensions escalate, could quickly push prices higher again. For now, oil remains a geopolitically driven market, where news has a greater impact on price action than traditional supply and demand fundamentals.
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