Oil prices slipped to near one-week lows after the US paused its attacks on Iran, easing fears of an immediate supply shock. Brent crude fell to $87.86 per barrel, and West Texas Intermediate (WTI) dropped to $82.24 early Tuesday. This followed a sharp 8% decline on Monday when Washington halted air strikes and announced progress in talks with Tehran.

Diplomatic Breaks Cool Geopolitical Premiums

The recent diplomatic thaw has peeled away some of the geopolitical risk premium that had pushed crude prices higher earlier this month. Despite this relief, the situation remains fragile. The US warned that military actions could resume if negotiations collapse. Meanwhile, oil flows through critical chokepoints like the Strait of Hormuz and the Red Sea are still disrupted. Exports through the Hormuz Strait averaged 2.9 million barrels per day in the week ending July 24, down from 5.9 million barrels daily the previous week. Saudi Arabia reported threats to its petroleum infrastructure, and maritime traffic through the Red Sea remains unsettled.

On the supply front, the Caspian Pipeline Consortium restarted shipments from its Russian Black Sea terminal after a week-long pause, providing a modest boost to available volumes.

Technical Signals Hint at WTI Testing Key Support

WTI prices have retraced from a recent peak near $90, settling around their 50-day moving average at about $81.92. The relative strength index retreated from overbought levels, signaling a loss of upward momentum. The $81 to $82 zone now serves as immediate support. Should prices close below this range, they might test further support near $77.93 and the longer-term average at $74.50. On the upside, regaining $84.65 is key before challenging stronger resistance between $87.90 and $90.10.

Traders are cautious. One analyst noted closing short positions at the 50-day average and may sell again if geopolitical tensions flare or Federal Reserve policies shift.

Brent Faces Possible Deeper Declines

Brent’s chart shows a sharp reversal after failing to hold above the $97 to $106 resistance band. Some analysts foresee a bearish wave that could push prices as low as $58.72, though this remains conditional. For that scenario to unfold, Brent would need to break below mid-$80 levels, then lose support near $80 and $70. A recovery above $90 would challenge this bearish outlook.

This material is for informational purposes and is not financial advice.