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- The oil price faces intense selling pressure as Iran agrees to reopen the Strait of Hormuz.
- Oil prices rally over 22% in July due to aggressive exchange of attacks between the US and Iran.
- Investors worry about the longevity of the US-Iran peace.
West Texas Intermediate (WTI), futures on NYMEX, holds onto early losses, trading 7.6% lower at around $78.60 during the Asian trading session on Monday. The oil price faces selling pressure as United States (US) President Donald Trump announced, through a post on Truth Social, that planned attacks on Iran have been suspended as the nation has agreed to surrender its nuclear ambitions and the total reopening of the Strait of Hormuz, a critical chokepoint to almost 20% of global energy supply.
“We have just been asked by Iran, and other Middle Eastern Countries, to hold off any attack in that the perimeters of a deal has been agreed to. This would include the Immediate, Complete, and Total OPENING OF THE HORMUZ STRAIT, and an end to Iran’s nuclear threat,” Trump wrote.
The announcement from US President Trump has boosted the odds of a resumption of peace talks with Iran, a scenario that diminishes fears of a prolonged energy supply disruption.
In July, the WTI Oil price gained over 22.5% due to excessive military aggression between the US and Iran after President Donald Trump called off the ceasefire.
Meanwhile, financial markets still worry about whether the ceasefire between the US and Iran would sustain for longer.
Analysts at IG Markets said, “The bigger focus is whether this week turns into a rinse and repeat of last week — with hopes of a deal collapsing as Iran digs in its heels and continues to leverage its control over the Strait, potentially through an attack on a U.S. base or a tanker transiting the waterway,” Reuters reports.
WTI technical analysis
The WTI US Oil trades lower at $78.70, extending a bearish near-term bias as price remains clearly below the 20-hour exponential moving average (EMA) at $81.18. The positioning under this short-term EMA suggests sellers retain control after the recent retreat from the mid-$80s, while the Relative Strength Index (RSI) at 34.20 hovers just above oversold territory, hinting at persistent but not yet exhausted downside momentum.
On the topside, initial resistance is located at the 20-period EMA around $81.18, which now acts as the first barrier to any recovery attempts and a key level that bulls would need to reclaim to ease immediate downside pressure. Looking down, the July 28 low at $77.16 is the key support level; a break below that would expose the oil price to the July 13 low at $72.53.
