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Crude oil prices extended their decline Wednesday as renewed Iran-Oman talks raised hopes that shipping through the Strait of Hormuz could improve, pushing Brent lower and sending WTI toward the closely watched $80 level. Yet tanker traffic through the strategic waterway remains severely restricted, leaving traders caught between easing geopolitical risk premiums and a physical oil market that is still far from normal.
Brent and WTI Fall as Hormuz Reopening Hopes Grow
Brent crude futures dropped $1.78, or 2%, to $86.80 a barrel by 00:27 GMT on Aug. 26, while U.S. West Texas Intermediate futures fell $1.49, or 1.8%, to $80.87. Both benchmarks had already lost more than 3% Tuesday, extending a sharp reversal from their recent highs.
The latest selling followed Iran's announcement that it had resumed discussions with Oman over management of the Strait of Hormuz. The two countries discussed creating a temporary joint navigation corridor and agreed to work on mine clearance, developments that raised expectations for safer passage through one of the world's most important energy routes.
Before the war began in February, Hormuz handled about one-fifth of global oil and liquefied natural gas shipments. That makes any improvement in shipping conditions potentially significant for the geopolitical premium embedded in crude prices.
The market is already pricing some optimism, but physical shipping activity remains much less reassuring. Only five commodity vessels crossed the Strait of Hormuz on Tuesday, compared with a 10-day average of 15, according to preliminary Kpler data cited by Reuters. Four vessels crossed Monday.
The disconnect is important: oil prices are falling on expectations that the disruption could ease even though actual flows through Hormuz have not yet returned to normal.
Brent Double-Top Structure Puts $95 Resistance in Focus
Brent's daily chart reinforces the short-term bearish pressure after the benchmark failed to sustain its latest recovery toward the mid-$90s.
Brent Crude Daily Double-Top Resistance. Source: Pankaj Jain SEBI Research Analyst (@EyeOn_Trade) on X
The TradingView chart shows Brent cash near $87.70 after another rejection below a major horizontal resistance level around $95.41. Pankaj Jain highlighted a structure resembling a double top, suggesting repeated failures near the same resistance area have weakened the bullish case.
The latest decline has taken Brent below $90 again, leaving the market considerably beneath the $95.41 ceiling. Momentum on the lower indicator is also deteriorating toward and below its neutral area, supporting the view that upward momentum has faded.
A sustained recovery above approximately $95 would weaken the double-top interpretation and indicate that buyers had regained control. Until that happens, the recent rejection leaves Brent exposed to further downside if selling pressure persists.
The technical picture also aligns with the fundamental backdrop. Expectations for improved Hormuz shipping conditions are reducing the geopolitical risk premium at the same time Brent is struggling beneath a clearly defined resistance zone.
WTI Slides Toward a Critical $80 Support Test
WTI is approaching an even more immediate technical decision point after breaking sharply lower from the $82 area.
WTI Crude $79.60-$80.05 Support Zone. Source: Forex Expertise (@GoldXpertise) on X
The one-hour TradingView chart shows WTI around $80.27 after a steep decline through previous short-term support. Price is now sitting just above a highlighted demand zone between approximately $79.60 and $80.05.
That makes the psychological $80 level one of the most important short-term areas for crude traders.
Forex Expertise identifies $79.60-$80.05 as the main support zone, but the chart does not imply an automatic rebound. Instead, confirmation from price action would be needed to show that sellers are losing control.
A sustained break below $79.60 would weaken the setup and suggest the decline is extending rather than stabilizing.
On the upside, the chart identifies $81.70-$82.30 as the principal resistance and supply zone. Former support has become potential resistance following the breakdown, meaning a rebound into that area could face renewed selling.
A recovery above $82.30 followed by a successful retest would weaken the immediate bearish structure. Until then, the balance of short-term momentum remains tilted toward sellers.
Surprise U.S. Crude Inventory Build Adds Pressure
Domestic supply conditions are adding another bearish influence ahead of the government's official inventory report.
The American Petroleum Institute reported that U.S. crude inventories increased by about 4.2 million barrels in the week ended Aug. 21, according to market sources cited by Reuters.
That increase was substantially larger than the roughly 600,000-barrel build expected by analysts surveyed by Reuters.
The official Energy Information Administration report is scheduled for 10:30 a.m. ET Wednesday. Confirmation of a sizable crude build could reinforce pressure on WTI, particularly if inventories rise alongside signs of softer demand.
A materially different EIA number, however, could quickly change that interpretation because API figures are preliminary industry estimates rather than the government's official inventory count.
U.S. Refiners Run Hard as Global Fuel Supplies Tighten
U.S. refinery conditions complicate the broader bearish oil story.
American refiners have been operating at unusually high utilization rates as disruptions to Middle Eastern and Russian fuel supplies increase demand for U.S. refined products. Refinery utilization has remained above 95% for an extended stretch, according to Reuters.
High refinery runs can strengthen crude demand because refiners need more feedstock, but they can also create operational risks if facilities are pushed harder for longer than usual.
The latest EIA data will therefore matter beyond headline crude inventories. Traders will also watch refinery utilization, gasoline stocks and distillate inventories for evidence of whether strong refining activity is translating into tighter product markets.
