Oil prices rallied strongly on Tuesday as hopes for a swift resolution to the US-Iran conflict faded once again. Brent North Sea crude rose more than 3.5%, while West Texas Intermediate advanced nearly 4%, reversing much of the previous week’s de-escalation-driven losses.
The move came after Iran’s chief negotiator said Washington must accept Tehran’s latest peace plan or talks would fail. But Trump warned the existing truce was “on the brink of collapse,” heightening fears that the Strait of Hormuz would remain largely closed to tanker traffic.
Despite intermittent ceasefire extensions and diplomatic efforts, meaningful reopening has not occurred. Investors are also watching Trump’s upcoming visit to Beijing, where discussions with his counterpart Xi Jinping are expected to cover the Iran war alongside trade and rare earths, with China being a key historical buyer of Iranian crude.
Technicals show a strong short-term recovery as WTI has reclaimed the $96 zone after last week’s dip toward $87. Resistance sits at $104 and support at $85, with deeper levels near $79 if de-escalation hopes revive.
Trade analysis
Short-dated WTI contracts remain volatile with active brackets from $80–$120. Diplomacy and military posturing may continue to dominate price action.
Bullish ($110 or higher) signals:
- Collapse of truce and renewed military incidents
- Iranian rejection of US terms and prolonged Hormuz closure
- No progress during Trump-Xi discussions on Iran
Bearish ($80 or lower) signals:
- Acceptance of a revised deal or Hormuz reopening timeline
- Visible resumption of tanker traffic through the Strait
- Additional global strategic stock releases
The strategy is to fade rallies into $110 on any short-lived optimism lacking confirmation, and buy dips toward $95 on fresh escalation signals or defiant statements. The base case for June is choppy trading in the $90–$110 range with upward bias as the market continues to price in a high risk premium.