Crude oil prices continued to come under downward pressure as the market became less concerned about the risk of supply disruptions at the Strait of Hormuz.
WTI is currently trading around USD 68.90 per barrel, while Brent is near USD 72.17 per barrel; both benchmarks are still heading for a fourth consecutive weekly decline as expectations grow that Gulf supply is gradually returning following signs of progress in U.S.–Iran negotiations.
The key shift lies in market sentiment. While oil prices were previously supported by concerns that energy transportation routes through Hormuz could be disrupted, this factor has now partly eased.
Signs that oil shipping activity in the Gulf region is normalising have weakened defensive buying, pulling crude prices away from the highs established during the period of heightened tensions.
On the supply side, the market is also facing several pressure points. OPEC+ has left open the possibility of further production increases in the period ahead, while supply from several Middle Eastern producers has shown signs of recovery. This has raised concerns that the oil market could move from a temporary shortage toward a more balanced condition, or even localised oversupply if demand does not improve accordingly. Although U.S. crude inventories have at times declined more sharply than expected, this has not been enough to reverse overall market sentiment, as the supply narrative continues to dominate price action.
However, downward pressure has partly slowed as the U.S. dollar eased. The DXY has retreated to around the 100.4–100.5 region following weaker-than-expected U.S. labour data, helping crude oil rebound from the recent low near USD 67 per barrel. A weaker dollar typically provides short-term support for USD-denominated commodities, including crude oil. Even so, this support remains more technical in nature rather than a clear signal of a trend reversal.
The issue is that weaker labour data also highlights demand-side risks. As the market sees signs of a slowdown in the U.S. economy, expectations for energy consumption in the coming months have also become more cautious. Therefore, while a softer dollar may help oil prices recover in the short term, the still-fragile demand outlook continues to limit the potential for a sustainable uptrend.
Overall, crude oil remains biased toward weak consolidation and further downside pressure in the short term. If Gulf supply continues to recover, OPEC+ sends clearer signals of higher production, and demand data continues to soften, WTI could retest the recent low around USD 67 per barrel, with a deeper downside target in the USD 64–65 per barrel area. Conversely, if the U.S. dollar continues to ease, U.S. inventories maintain a strong drawdown trend, or U.S.–Iran negotiations face setbacks, oil prices could stage a technical rebound, with the USD 72–73 per barrel region being the key area to watch.
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