Oil Price Forecast: Oil Mixed Near $100 as Markets Weigh UAE’s OPEC Exit and Stalled Iran Peace Plan

Written by Samer Hasn, Senior Market Analyst at XS.com

Oil prices were mixed today, with WTI futures dipping slightly to 100 $ / bbl and ICE Brent futures edging higher to 105 $ / bbl after both benchmarks surged by about 3% yesterday.

The calm in oil prices comes amid a diplomatic stalemate over the war in the Middle East, as well as anticipation of the Federal Reserve's interest rate decision today and subsequent statements. The market is also studying the implications of the United Arab Emirates leaving the Organization of the Petroleum Exporting Countries, which does not appear to have been priced in either direction yet.

On the Middle East front, Iran has proposed a three-stage peace plan to regional mediators to end current hostilities. According to The Wall Street Journal, the deal suggests that Tehran will cease its attacks in the Strait of Hormuz if the United States and Israel end the war and lift the blockade on Iranian ports. Under this proposal, negotiations regarding Iran's nuclear program and its funding of regional proxies would be delayed until after the waterway's management is resolved.

While some officials are reviewing the offer, others remain skeptical about the long-term implications of delaying key issues. Raz Zimmt, director of the Iran program at Israel’s Institute for National Security Studies, noted that it is clear to all that whatever is not resolved by the end of the war is highly unlikely to be resolved afterward. Meanwhile, U.S. Secretary of State Marco Rubio indicated that while Iran may be serious about a deal, the U.S. will not permit Tehran to maintain control over the strait.

Meanwhile, President Trump has ordered aides to prepare for an indefinite blockade of Iranian ports, aiming to force a nuclear capitulation that Tehran has previously resisted, according to WSJ in another report. The president determined that maintaining economic pressure carries less risk than resuming a major bombing campaign or exiting the conflict entirely.  The US administration recently rejected an Iranian peace proposal, viewing it as a tactic to avoid nuclear concessions. Suzanne Maloney, an Iran expert at the Brookings Institution, noted that the regime likely believes it can withstand the blockade longer than the U.S. can tolerate a potential global recession.

Iran's insistence on maximalist demands will not help Trump agree to any deal perceived as a defeat for the United States, which would fail to achieve any of its objectives. Furthermore, any interim agreement or one that postpones discussion of the key outstanding issues will merely be a truce that all sides will exploit for military buildup. This narrative could perpetuate the war premium and supply disruptions in oil prices, adding to the premium already resulting from structural damage.

The UAE’s withdrawal from OPEC has sent a significant shock through the market, driven by heightened uncertainty about future supply stability. As independent actors increasingly control global output, existing production forecasts have become more tenuous, especially in the wake of disruptions caused by the closure of the Strait of Hormuz. While this strategic pivot may eventually allow the UAE to boost exports, the impact on prices is likely to remain muted in the short term as long as maritime transit remains paralyzed.

However, this development could intensify downward pressure on oil benchmarks if a comprehensive diplomatic settlement is reached soon. It is highly probable that regional exporters will seek to boost production to recoup war-related losses, yet without a coordinated framework, a lack of consensus on supply levels could lead to significant market volatility.

On the monetary front, today’s Federal Reserve meeting is expected to be a pivotal driver of market movement. Should Jerome Powell adopt a more hawkish tone than anticipated, it could intensify downward pressure on oil prices by further strengthening the dollar and elevating the risk of a protracted economic slowdown both in the United States and abroad.

USOIL Technical Outlook

On the 4-hour timeframe, USOIL is consolidating above the Equilibrium zone at 97.33 and the key Fibonacci level of 0.236 at 99.34.

On the upside, if USOIL maintains support in the current Equilibrium zone and continues its trend, this may draw buyers’ attention to 104.52 and the bearish fair value gap at 113.35 and 109.19. On the downside, if the price breaches again below the current key zone and moves lower, this may draw sellers’ attention to the 0.5 level at 92.30 and the key bullish order block at 86.73 and 85.50.

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Disclaimer: The chart reflects the analyst's opinion and does not constitute investment advice. Past performance is no guarantee of future returns. Seek independent advice before making decisions