July WTI crude oil futures traded sharply lower through Thursday as traders removed much of the geopolitical premium tied to tensions between the United States and Iran. Through June 11, the contract traded between a high of $95.47 and a low of $85.13 before settling near $85.93. At that level, prices were down $4.32, or 4.79%, from last week’s close.
The week’s price action was driven largely by changing expectations surrounding President Trump’s approach toward Iran. Early concerns that the conflict could escalate and threaten Middle East oil supplies helped support crude prices near weekly highs. Later, signs that diplomacy remained possible encouraged traders to reduce positions built around fears of a major supply disruption.
Trump Pulls Back From Military Action
The biggest shift in sentiment came after Trump said he had canceled planned military strikes against Iran. The decision signaled that the administration was still leaving room for negotiations rather than moving immediately toward broader military action.
Before that announcement, traders had priced in the possibility that direct U.S. involvement could increase risks to energy infrastructure and tanker traffic in the region. As fears of an immediate escalation eased, crude prices moved lower as traders removed part of the geopolitical risk premium from the market.
Trump also suggested that a peace agreement with Iran remained possible. Those comments reinforced expectations that…
July WTI crude oil futures traded sharply lower through Thursday as traders removed much of the geopolitical premium tied to tensions between the United States and Iran. Through June 11, the contract traded between a high of $95.47 and a low of $85.13 before settling near $85.93. At that level, prices were down $4.32, or 4.79%, from last week’s close.
The week’s price action was driven largely by changing expectations surrounding President Trump’s approach toward Iran. Early concerns that the conflict could escalate and threaten Middle East oil supplies helped support crude prices near weekly highs. Later, signs that diplomacy remained possible encouraged traders to reduce positions built around fears of a major supply disruption.
Trump Pulls Back From Military Action
The biggest shift in sentiment came after Trump said he had canceled planned military strikes against Iran. The decision signaled that the administration was still leaving room for negotiations rather than moving immediately toward broader military action.
Before that announcement, traders had priced in the possibility that direct U.S. involvement could increase risks to energy infrastructure and tanker traffic in the region. As fears of an immediate escalation eased, crude prices moved lower as traders removed part of the geopolitical risk premium from the market.
Trump also suggested that a peace agreement with Iran remained possible. Those comments reinforced expectations that diplomacy could prevent a more severe disruption to global oil supplies.
Strait of Hormuz Remains a Major Concern
Despite the market’s focus on diplomacy, the Strait of Hormuz continues to represent a major risk for oil markets.
Iran warned vessels against using the waterway, raising concerns about potential disruptions to one of the world’s most important oil shipping routes. At the same time, commercial shipping continued through the strait, helping calm fears that exports would be significantly affected in the near term.
This combination of ongoing risks and uninterrupted oil flows created uncertainty throughout the week. Traders recognized that while the immediate threat appeared lower, the potential for future disruptions remained high.
Inventory Draw Offers Support
Fundamental data provided some support for crude prices during the week.
The Energy Information Administration reported that U.S. crude oil inventories fell by about 7.2 million barrels for the week ended June 5. The larger-than-expected draw suggested that domestic supply conditions remain relatively tight heading into the peak summer driving season.
However, the inventory report failed to offset the influence of geopolitical headlines. Traders remained focused on developments involving Trump and Iran rather than domestic supply data.
Weekly Light Crude Oil Futures
Trend Indicator Analysis
The main trend is up according to the weekly swing chart and moving average analysis. However, momentum has shifted to the downside.
A trade through $97.00 will shift momentum back to the upside, while a move through $105.21 will negate the bearish chart pattern and signal a resumption of the uptrend. The main bottom is $77.22. A trade through this level will change the trend to down according to the weekly swing chart.
The 52-week moving average at $69.12 and the nearest main bottom is at $55.27 are the major support points. They represent value.
The short-term range is $86.13 to $105.21. The market is currently trading below its pivot at $95.67, making it resistance. Overcoming it will put the market in a strong position.
The intermediate range is $77.22 to $105.21. Its retracement zone at $91.21 to $87.91. This area is currently being tested. “Buy the Dip” traders could support the market in this zone.
The long-term range is $55.27 to $105.21. Its retracement zone at $80.24 to $74.35 is the last major support area before the 52-week moving average at $69.12. Inside this zone is the last main bottom at $77.22. This area will be very attractive to buyers if ever tested.
Weekly Technical Forecast
The direction of the Weekly July Crude Oil futures contract for the week-ending June 19 is likely to be determined by trader reaction to $87.91.
Bullish Scenario
A sustained move above $87.91 will signal the presence of buyers. Initially, the move will face headwinds at $91.21 and $95.67. However, $97.00 is the trigger point for a possible acceleration to the upside.
Bearish Scenario
A sustained move under $87.91 will indicate the presence of sellers. This could create the downside momentum needed to fuel a steep drop to $80.24 to $74.35. This is also a value zone that is likely to attract new buyers.
Outlook: Diplomacy Dominates Market Sentiment
The outlook for crude oil will depend heavily on whether diplomatic efforts between the United States and Iran continue making progress.
If tensions continue to ease and negotiations advance, traders could remove additional geopolitical premium from crude prices, creating further downside pressure. However, risks remain elevated. Any renewed threat to Middle East oil supplies or tanker traffic through the Strait of Hormuz could quickly reverse sentiment and support higher prices.
For now, price action through Thursday suggests that traders increasingly believe diplomacy is more likely than escalation. Still, crude oil remains highly sensitive to geopolitical developments, meaning volatility is likely to remain elevated as markets respond to each new headline.
Technically, downside momentum appears to be building with value buyers waiting for a pullback into the retracement zone at $80.24 to $74.35.
