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Oil prices fell on Thursday as markets reacted to an interim deal between the U.S. and Iran, which could reduce the risk of war and reopen the Strait of Hormuz. The prospect of additional Iranian crude returning to global supply weighed on sentiment. Brent crude dropped to $79.40, while WTI fell to $74.70.
The main factor pressuring oil is the possibility of Iranian barrels returning to the market. If the Strait of Hormuz is reopened, oil and gas could move through one of the world’s busiest shipping lanes within 30 days, easing the supply strain that helped support prices during the conflict.
Traders are also monitoring the 60-day negotiation period. If both sides follow the terms of the deal, oil supply could improve quickly, helping prices slide back toward pre-war levels.
Despite the near-term easing in supply risk, the larger concern for oil prices is whether the market could shift from shortage to oversupply next year. The IEA projects that supply could exceed demand by 5.05 million barrels per day in 2027 following the return of Middle East oil, which could place downward pressure on prices.
At the same time, the Fed has turned more hawkish due to continued high inflation. A rate hike later this year could slow economic growth and reduce oil demand. With supply growth and weaker demand, the setup remains bearish unless the U.S.-Iran deal breaks down again.
WTI has broken below $80 on the short-term chart, a level described as the primary support after the U.S.-Iran war. The breakdown is seen as opening the door to further downside in the near term, while $87 is identified as the key resistance level.
On the 4-hour chart, RSI has reached extremely oversold levels, suggesting a rebound could develop soon. On the weekly chart, $80 to $78 is highlighted as important support. After a break below $78, the next support is cited at $69.
The daily chart points to a broader support zone of $66 to $73, also linked to a descending trend line from September 2023. If $66 holds and prices move back above $80, the market could consolidate between $80 and $100. If crude breaks below $66, prices are likely to remain under downward pressure.
Brent approached key support at $80 on Thursday, with the level also reflected by the 50 and 200 SMA on the weekly chart. A weekly close below $80 could push RSI lower and increase short-term pressure.
Conversely, if Brent recovers back above the $100 area, it is expected to continue higher toward the $120 to $125 level.
On the daily chart, an important support zone of $80 to $81 is where the price is hovering. A break below this range could move Brent toward $72 to $74. A further break of $72 could push prices toward the $69 area, described as support of a descending broadening wedge pattern.
RSI is reported to be in an extremely oversold condition not seen since December 2025 and April 2025. The article notes that such oversold conditions have historically triggered a strong rebound in the global oil market, suggesting traders may expect a rebound from the $70 to $80 region for Brent.
Oil prices remain under pressure as a U.S.-Iran deal reduces the risk of supply shortages and raises the prospect of additional Iranian crude entering the market. However, a hawkish Fed and concerns about potential oversupply—supported by the IEA’s projection of supply exceeding demand by 5.05 million bpd in 2027—could continue to weigh on prices.
Technically, both WTI and Brent are entering support areas, but the support zones are described as broad due to uncertainty. With the market oversold in the short term, prices may rebound from the $70 to $80 range.
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