West Texas Intermediate (WTI) Crude Oil experienced a sharp selloff, with front-month futures dropping approximately 5.8% in a single day to test the $75 level, marking the lowest price since early March [1]. This decline was driven by market anticipation of a draft peace framework between Washington and Tehran that could lift the US naval blockade and allow Iranian oil exports to resume, despite no official confirmation or signed agreement being made public [1]. Brent crude's August contract mirrored this move, falling below $79 for the first time since March [1].
The proposed memorandum of understanding (MOU) reportedly includes reopening the Strait of Hormuz, lifting the blockade, capping Iran's nuclear activities, and releasing frozen assets, with more complex issues deferred to a 60-day follow-on negotiation [1]. US officials have discussed a potential signing ceremony in Geneva on Friday and a reopening of the Strait without Iranian tolls, but Tehran's version of the terms does not fully align with Washington's account [1]. Notably, no one outside the negotiating rooms has seen the actual text of the agreement, and a former US energy adviser expressed skepticism about the lack of documentation [1].
Despite the absence of tangible supply changes—tracking through mid-June showed the blockade largely intact with only one supertanker reportedly clearing the cordon—the market has already priced in a $5 drop, assuming a clean signing of the deal [1]. US officials estimate the odds of a signature at around 80%, but acknowledge Iran's internal politics remain unpredictable, with recent street protests in Tehran and threats of retaliation highlighting ongoing risks [1].
From a technical perspective, WTI broke decisively below its 200-day Exponential Moving Average (EMA) near $78.50, its first such close since late February, and continued to fall through $76 toward $75 [1]. The 50-day EMA remains near $90, underscoring the extent to which the war premium has eroded [1]. The Stochastic Relative Strength Index (Stoch RSI) is deeply oversold, yet every intraday bounce has been met with further selling, indicating strong bearish sentiment [1].
CONCLUSION
The crude oil market has reacted strongly to unconfirmed reports of a US-Iran peace deal, with WTI and Brent prices plunging to multi-month lows. Despite the lack of a signed agreement or actual supply changes, traders have aggressively repriced oil, reflecting both optimism and caution about the deal's prospects. The technical breakdown and persistent selling pressure suggest the market remains highly sensitive to further developments.