WTI drops below $85.50 amid growing hopes for US-Iran diplomacy

• Down 4.95% on the day, WTI trades near $85.30 under selling pressure in early Asian trading on Tuesday.
• Fresh attacks on Iran are highly unlikely to be ordered, according to Trump.
• Crude oil prices come under pressure as hopes rise for a negotiating breakthrough to end the US war in Iran.

At around $85.30 in Tuesday’s early Asian session, West Texas Intermediate (WTI), the US crude oil benchmark, has retreated to its lowest level since August. Optimism over diplomatic attempts to end the Middle East war is weighing on prices despite continued attacks across the region. Later on Tuesday, traders await the American Petroleum Institute (API) weekly crude oil stock report.

Over the weekend, US President Donald Trump described the prospect of ordering extensive strikes on Iran as “highly unlikely”. He nevertheless said this depended on the country signing a “very strong agreement.”

Talks aimed at advancing negotiations between the US and Iran were discussed in Washington, DC, by Qatari Prime Minister and Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani, Trump and Vice President JD Vance. Al Thani said on Monday that he had met the two US leaders.

According to an Al Arabiya source, a fresh Qatar-Pakistan proposal would provide for Washington to allow uranium enrichment on Iranian soil up to 3.67%, a limit Tehran has agreed to accept. Efforts to restart bilateral negotiations also include a US offer to release between $6 billion and $9 billion in Iranian assets if a deal is secured.

In a note, TACenergy analysts said: "This seems to have encouraged sellers on the prospects for peace even while the actual fighting is not slowing down,"

Meanwhile, responsibility for Sunday’s attack on Saudi oil giant Aramco’s corporate office was claimed by the Houthis. The office is in the heart of the financial district in Riyadh, the Saudi capital. According to the Saudi energy ministry, debris from the attempted attack shattered windows on several floors.

Oil remains volatile amid uncertainty over US-Iran diplomacy

Oil markets, according to analysts at Commerzbank, "remain volatile as investors assess whether the Democrats' control of Congress could accelerate diplomatic efforts to end the US-Iran conflict." Sentiment remains fragile, with the analysts adding that "reports that Iran is reviewing proposals concerning its nuclear programme offered some encouragement, although no comprehensive agreement has been announced and risks to Gulf shipping remain,"

Technical Analysis: WTI Adopts a Bearish Bias Below the 100-Day SMA

Below both the 100-day simple moving average (SMA) and the lower Bollinger Band on the daily chart, WTI US Oil retains a bearish near-term outlook. This positioning reinforces the break beneath the recent volatility floor. The scale of the pullback is also evident from the distance to the Bollinger Bands 20-period SMA and upper band, both of which remain well above the price. Meanwhile, the Relative Strength Index (14), at 34.73, is approaching oversold territory, suggesting continued downward pressure rather than confirming a reversal.

The 100-day SMA at $86.40 provides the first resistance on any advance. Close behind is the lower Bollinger Band around $86.65, creating a narrow resistance zone just above the current price. Further up, the Bollinger mid-line at $96.35 represents a more substantial structural barrier, followed by the upper band near $106.05, which sets a broader ceiling for a stronger corrective rebound. The supplied indicators identify no clear support beneath $85.30, so traders are likely to turn to previous lows and psychological levels for signs of potential demand. As long as the price stays below the overhead technical barriers, the present set-up suggests that rallies remain vulnerable to selling.

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