Oil prices fell sharply on Tuesday in August 2026 after US Treasury Secretary Scott Bessent said a deal with Tehran to reopen the Strait of Hormuz could be reached “today or tomorrow.” The comments revived optimism after five months of severe disruption to Gulf traffic.
Investors remain cautious. Earlier announcements of imminent deals have repeatedly failed to materialize. Underlining ongoing risks, a merchant ship was hit by a projectile in the Strait of Hormuz on Tuesday, with a crew member listed as missing and fire reported in the accommodation area. Strategists note the market is pricing a more nuanced path with lower risk of immediate military escalation, but no firm guarantee that the Strait returns to normal functioning.
Technicals reflect renewed downside pressure as the geopolitical premium compresses further. Prices have extended the post-deal decline that began earlier in the summer, testing lower levels amid thin liquidity and oversold conditions. Resistance sits near recent recovery highs while support is being probed toward multi-month lows.
Trade analysis
Short-dated August contracts remain highly sensitive to headline risk around Hormuz and the 60-day diplomatic process.
Bullish ($80 or higher) signals:
- Failure of the anticipated deal or renewed attacks in the Strait
- Slower-than-expected resumption of tanker traffic
- Escalation involving regional proxies
Bearish ($65 or lower) signals:
- Confirmed deal and visible acceleration of shipping through Hormuz
- Further sanctions relief
- Continued strong supply response from non-Gulf producers
The strategy is to fade short-covering rallies on optimistic comments that lack concrete implementation details. Traders may maintain a cautious long-bias only on clear evidence of deal breakdown. Our base case for August is continued pressure on prices as markets price in higher odds of gradual normalization.