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6% fall in one day: WTI Oil price tumbles on hopes of Hormuz reopening
- The Oil price faces intense selling pressure on hopes of the Strait of Hormuz reopening.
- US President Trump said that the Iran agreement is “largely negotiated”, but there is no rush for the deal.
- More downside looks likely towards $87 if the oil price fails to hold $90.00.
West Texas Intermediate (WTI), futures on NYMEX, are down 6% to near $90 in the European trading session on Monday, the lowest level seen in over two weeks. The oil price clings to opening losses amid hopes that energy supply disruptions due to the prolonged closure of the Strait of Hormuz, a critical passage to almost 20% of global energy supply, will be fixed soon.
Over the weekend, United States (US) President Donald Trump said in a post that an agreement with Iran towards a permanent resolution has been “largely negotiated”, which includes the opening of the Strait of Hormuz.
However, in a later post, Trump said that there is “no rush for the Iran deal”, as time is on Washington’s side. He added, “The Blockade will remain in full force and effect until an agreement is reached.” Meanwhile, Iran has not confirmed any progress in negotiations with the US.
Oil prices rallied by over 68% in almost two weeks when the Middle East war started on February 28. They started cooling down after both Iran and the US confirmed a temporary truce, aiming to reach a permanent resolution, but they are still almost 35% since the onset of the war.
WTI Technical Analysis
The WTI US Oil trades lower at around $90.00 as of writing. The near-term bias stays bearish as price holds well below the 20-day exponential moving average (EMA), which is at $96.80.
The Relative Strength Index (RSI) has slipped toward the low-40s, hinting at persistent downside pressure but stopping short of oversold extremes, which suggests scope for further weakness if the EMA ceiling is not reclaimed.
On the topside, initial resistance is now defined by the 20-day EMA at $96.80, and a daily close above this barrier would be needed to ease the current bearish tone and open the way toward higher levels. Until then, the absence of nearby mapped supports implies that any renewed selling could expose prior reaction lows on the chart, leaving WTI vulnerable to additional downside extension while below the EMA.
Looking down, the WTI Oil price could slide towards the May 6 low of $86.92 if it fails to hold $90.00. A downside move below $86.92 woudl expose the oil price to further downside towards the April 17 low at $78.88.
