Crude oil prices fell more than 6% Monday after the United States and Iran paused attacks over the weekend, giving traders hope that diplomacy could ease the conflict and allow more oil shipments through the Strait of Hormuz.
Brent crude futures dropped $6.20, or 6.4%, to $90.58 per barrel in early trading. West Texas Intermediate, the U.S. benchmark, fell $5.80, or 6.5%, to $83.51. Both benchmarks reached their lowest levels in nearly a week after rising for three straight weeks.
The sell-off marked a sharp change from last week, when Brent climbed above $100 as attacks disrupted Middle East exports. Iran said it would continue to hold fire as long as the United States maintained its bombing pause. Meanwhile, U.S. officials said Washington stopped its attacks to give diplomacy more time.
However, the pause has not restored normal oil flows. Fewer than 10 commodity vessels crossed the Strait of Hormuz each day over the weekend. Only seven vessels passed through Sunday, showing that shipping companies remain cautious despite the break in fighting.
The Red Sea also remains a concern. Traffic through the Bab el-Mandeb Strait fell to its lowest level in months after Yemen’s Houthis reported attacks on Saudi oil facilities in Yanbu and Jizan. Eleven commodity vessels crossed the route Sunday, including seven oil tankers.
As a result, the market is pricing in less immediate danger without assuming that the supply problem has ended. A lasting diplomatic breakthrough could push prices lower. Still, another attack on tankers, ports or energy facilities could quickly bring buyers back.
Brent Falls Below a Key Short-Term Level
Brent’s four-hour trend weakened sharply as the market gave back much of last week’s rally. The price moved below its 50-period exponential moving average at $90.87, while the relative strength index fell to 33.55.
That reading puts Brent close to oversold territory, which means the decline may slow after such a steep move. However, buyers still need to lift the price back above $90.87 before the short-term picture improves.
For now, the $85 to $86 area offers support. A break below that zone would extend the decline, while a move back above $90 to $91 would suggest that supply concerns are returning.
WTI Remains Under Pressure Near $83
WTI also slipped below its 50-period exponential moving average, which stood at $84.53. Its relative strength index fell to 40.57, showing weak momentum but not an oversold market.
The first support area sits near $83. A sustained move below that level could put $82 and then $80 in focus. On the other hand, WTI must recover above $84.50 to reduce the immediate selling pressure.
Other supply signals also lean slightly bearish. U.S. commercial crude inventories rose by 2 million barrels to 411.7 million barrels in the week ended July 17. However, stocks remained 6% below their five-year seasonal average, leaving the market with a limited cushion if shipments fall again.
OPEC+ plans to return another 188,000 barrels per day in August and will review market conditions Aug. 2. Therefore, oil prices may face further pressure if diplomacy holds and shipping activity improves. Still, continued disruption across Hormuz and the Red Sea could limit the decline
