WTI Holds Near $90 as Markets Await Further Signals from the U.S.–Iran Front

This shows that the oil market is still being driven mainly by geopolitical factors, where even a small shift in negotiation expectations can trigger large price swings.

This week, oil prices have moved sharply in response to headlines related to the U.S.–Iran situation and the Strait of Hormuz. Earlier, both Brent and WTI fell more than 5% after markets priced in the possibility that Iran could accept an agreement to reopen the Strait of Hormuz within about a month. This is a crucial energy transportation route, so if shipping activity in the area is restored, the risk of a global supply shortage would ease and oil prices would come under downward pressure.

However, the decline did not last long. When reports emerged that the U.S. had continued to strike an Iranian military facility, supply concerns returned and defensive buying quickly appeared. This shows that the oil market remains highly sensitive to geopolitical news. If tensions ease, oil prices could fall further; but if the conflict escalates, prices could rebound quickly as investors price in the risk of supply disruptions.

In addition to geopolitical factors, U.S. inventory data this week also provided some support for oil prices. According to API data, U.S. crude inventories fell by 2.8 million barrels in the week ending May 22, marking the sixth consecutive weekly decline. Gasoline inventories also dropped by 3.2 million barrels, suggesting that U.S. fuel demand remains relatively firm ahead of the peak summer driving season. Although distillate inventories rose slightly, the continued drawdown in crude stocks still indicates that the physical market is not facing a clear oversupply situation.

However, inventory data alone is not enough to establish a sustained uptrend in oil, as market sentiment remains heavily dependent on developments in the Middle East.

In the short term, oil prices are likely to continue moving in line with U.S.–Iran developments and risks surrounding the Strait of Hormuz. If there is no major new development, WTI may continue to trade within the $88–$92 per barrel range, reflecting a cautious market that has not yet confirmed a clear trend.

In a scenario where geopolitical tensions escalate or shipping activity through Hormuz remains disrupted, defensive buying could strengthen again. In that case, WTI could retest the $94–$96 per barrel area, with a possible move toward $98–$100 if supply shortage risks intensify.

Conversely, if the U.S. and Iran make clear progress in negotiations, especially with signals that the Strait of Hormuz could reopen, the geopolitical risk premium could narrow quickly. Under this scenario, WTI could fall back toward the $85–$88 per barrel range. If selling pressure increases and inventory data no longer provides support, prices could continue to test lower levels.