USOIL Drops Toward $111 as Sudden Ceasefire Hopes Trigger Profit Taking – Will Hormuz Disruptions Push It Back to $120?

Quick overview

USOIL is currently trading for about $111 per barrel on April 6, 2026, showing a 3% possible drop in value for the day after reaching a high of $115.50 this morning. Yesterday it closed at $114.28 after jumping up 2%. The crude has been stick rather volatile for a little while now following a pretty dramatic 11% surge in value just a few days ago.

So far in the year, USOIL is up by over 80% thanks to all the worries about supply which have been building up. However prices are still way down from the high point back in late 2025, and the fact that the world is still stuck in this state of high alert because of all these headline news stories, and also the fact that a lot of traders are away on holiday, has kept prices pretty low.

Why is USOIL pulling back toward $111 right now then?

Its because of reports that there might be a 45-day truce being worked out between the US and Iran that have got traders getting a bit nervous and so they are selling up and taking profits now. But at the same time, the Strait of Hormuz is still a total mess and thats really causing problems for oil supplies – we are talking about nearly 20% of all the worlds oil coming from there. No wonder there is volatility in the oil markets at the moment.

Geopolitical Tensions Keep Risk Premium Alive, But a Truce Could Help Lower the Price of Oil

The main reason for all the worries is the US and Iran conflict. You will have noticed that President Trump has been getting a bit more aggressive in his statements towards Iran, which has driven oil prices up. However, things changed with the news that third parties are now getting involved and talking about a possible truce. This has made traders start thinking that maybe things wont be so bad after all and that the price of oil could actually come down.

OPEC+ responded to all this by agreeing to allow a tiny increase in oil supply in May, and they also made it clear that any damage to the oil infrastructure in the region is going to be really hard to fix and would cost a lot of money. Iran has been saying that they might make some special deals to let some countries get some oil from them, which is a bit confusing and is causing even more problems.

USOIL is still in a pretty good position technically though

If we look at a chart of the price of oil, it is still showing all the right signs – it is still going up for example, and its still above an important line that it was stuck below just a few weeks ago. Its also come out of a longer term downtrend and that is a big positive.

It is currently sitting just above a key support point at around $106.33 and its also being helped by a moving average that is sitting at about $101, and another one at $88.

If the price of oil can get above $115 then it could go all the way up to $119.53 and maybe even as high as $126, which is what a lot of traders are thinking could happen. If that happens, then it would be a big buy signal and would suggest that the price of oil is going to keep going up.

The Three Big Factors That Will Decide Where Oil Prices Go in the Short Term

• Any news on the US-Iran truce talks and when the Strait of Hormuz is going to open up again.
• OPECs plans for how much oil they are going to produce and whether they can actually deliver on those plans in the current situation.
• Any changes in the bigger economic picture – such as the dollar getting stronger or if people think that inflation is going to go up because of the higher price of oil.

Short-term Volatility vs Long-term Upside Potential for Oil

Short-term, things are a bit uncertain – maybe the price of oil will go up again, maybe not. The chances of a big swing in either direction are pretty high. The other day I heard that some traders think that the price of oil could even go up to $120 if things get really bad between the US and Iran. Some analysts are saying that the price of oil could be all over the place in April – anything between $108 and $115 for example. But then there are some doomsday scenarios where the price of oil could even go up to $133 if things get really bad.

Longer-term, Im feeling pretty optimistic about the price of oil. Even though OPEC is trying to sort things out, the fact is that we are still running a big deficit in oil and that situation is not going to be fixed anytime soon. If the Strait of Hormuz stays closed then the price of oil will keep going up. But if the price of oil was to go down to $100 then it would be a pretty bad sign. Thats one thing though – if we get a series of higher lows and more and more people start buying the price of oil then that would be a pretty big sign that the price of oil is going to keep going up, and as long as the Strait of Hormuz stays closed then that is probably what will happen.

ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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