WTI Oil tumbles as US-Iran compromise proposal fuels de-escalation hopes

• More than 2%: US Oil prices retreat on Tuesday, reversing an earlier advance to a one-month high above $100.
• Hopes of easing tensions rise on reports that the United States has backed a compromise proposal and Iran has given preliminary agreement.
• Interest on Iranian funds frozen in Qatar would be transferred under the proposal, which also envisages a possible international inspection of Iran's nuclear facilities.

West Texas Intermediate (WTI) US Oil is down 2.36% on Tuesday. At the time of writing, it trades around $95.70, having reversed sharply from an earlier one-month high above $100. Reports of a fresh diplomatic proposal between the United States (US) and Iran have raised expectations of reduced tensions in the Middle East, driving the retreat in crude oil.

Washington has reportedly approved a compromise proposal that Tehran has provisionally accepted, according to Israel's Channel 12 News. Pakistan's army chief presented the proposal to senior Iranian officials on Tuesday. Both Pakistan and Qatar are reportedly mediating to narrow the differences between the two countries.

Preventing further escalation and opening the way for renewed negotiations between Washington and Tehran are the initiative's objectives. While the proposed agreement's exact terms are still unclear, the possibility of a diplomatic breakthrough is reducing the geopolitical risk premium in oil prices.

Iran's demands for access to funds frozen overseas would reportedly be partly addressed by the proposal. Channel 12 News reports that interest earned on approximately $6 billion of Iranian funds in Qatari banks would be paid to Iran. The measure would offer a financial concession to support negotiations without necessarily releasing the principal.

A Qatari report cited by Channel 12 News also indicates that Tehran has reportedly accepted a confidential visit to Iranian nuclear facilities by the International Atomic Energy Agency (IAEA). With no public announcement planned, such an inspection could help address US concerns over Iran's nuclear programme.

Official confirmation of the reported arrangement is still pending. The scope of each side's commitments is also unclear, and preliminary agreement does not necessarily mean a final deal will follow.

$95.61: WTI US Oil technical outlook

At $95.61 on the four-hour chart, WTI US Oil retains a positive bullish bias. It remains above both the 100-period simple moving average (SMA) at $92.00 and the 200-period SMA at $93.15. Trading above nearby horizontal support at $95.00 also points to underlying buying interest on pullbacks. Meanwhile, the Relative Strength Index (14), at around 46, suggests that upward momentum is pausing rather than reversing fully.

The $95.00 horizontal level provides immediate downside support. Should selling intensify, the next levels are the 200-period SMA near $93.15 and then the 100-period SMA at $92.00. For an advance, the previous horizontal ceiling at $101.05 marks the next significant resistance. A sustained move through that barrier would likely clear the way for the broader bullish trend to resume.

(The technical analysis of this story was written with the help of an AI tool. Know more.)