Oil Prices Head Under $90 as Diplomatic Progress Builds

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Oil prices reversed sharply as easing geopolitical tensions fueled optimism across global markets.

Peace Trade Gains Momentum

Markets continued to lean into the “peace trade,” with oil prices declining as expectations for a diplomatic resolution improved. Optimism has been supported by comments from Donald Trump, who signaled progress and mentioned the possibility of a second meeting in Pakistan. His tone remains constructive, reinforcing market confidence that a deal may be achievable.

Developments in the Middle East have also helped sentiment. While updates from Lebanon have been limited, they have not disrupted the broader narrative. More notably, Iran has reportedly refrained from testing the U.S. Hormuz blockade, a move interpreted as a sign of restraint and potential progress.

Oil Rally Reverses Sharply

Despite opening the week with strong gains, oil prices quickly lost momentum. WTI crude surged to around $105 in early trading after closing near $96.50 but failed to hold those levels.

As the session progressed, prices reversed sharply, falling back toward $97 by the U.S. close and extending losses into the low $90s the following day. This wide price swing highlights how sensitive oil markets remain to geopolitical headlines and shifting expectations.

WTI Chart Daily – A Strong Bearish Reversal

Inventory Data Adds Pressure

Private inventory data further weighed on oil sentiment ahead of official U.S. figures:

• Crude oil: +610K vs. -1.3M expected (bearish build)
• Gasoline: +626K vs. -2.2M expected (unexpected build)
• Distillates: -3.4M vs. -2.5M expected (supportive draw)
• Cushing: -1.7M (draw)

The surprise builds in crude and gasoline added downside pressure, reinforcing the shift away from bullish momentum.

Market Implications

The combination of easing geopolitical risk and softer oil prices has supported equities, with U.S. stocks now trading above pre-war levels. While risks remain—particularly given the unpredictability of negotiations—the current trajectory suggests markets are increasingly pricing in stabilization rather than escalation.

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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