prices are entering a critical phase as the geopolitical landscape in the Middle East shifts, with WTI crude oil falling toward the $90-per-barrel level amid growing hopes that the Strait of Hormuz could be reopened. In my view, the market has already started pricing in the possibility of a decline in the geopolitical risk premium that pushed oil prices higher in recent weeks, particularly after Iran proposed reopening the strait within seven days in exchange for easing U.S. pressure.
Therefore, I currently lean toward the view that downside pressure on WTI crude oil prices has become more evident in the short term. However, I do not expect the path toward lower oil prices to be straight or free of volatility.
Oil Prices Between Diplomacy and Supply Risks
In my view, the most influential factor driving oil prices today is no longer global production levels alone. Instead, it is increasingly tied to the market’s ability to transport oil supplies safely and maintain uninterrupted flows through strategic shipping routes.
The Strait of Hormuz is at the forefront of these factors, as it is one of the world’s most important energy trade routes. Therefore, I believe that any meaningful improvement in the security and diplomatic situation surrounding the strait could quickly weigh on oil prices by reducing the risk premium priced into the market.
Accordingly, I believe the recent decline in WTI crude oil prices reflects a repricing of geopolitical risks more than a fundamental shift in global demand. If Iran’s initiative develops into an effective negotiating process and oil tanker traffic continues normally, I expect selling pressure on crude oil to increase, as the market would no longer need to maintain the same level of geopolitical risk premium.
However, continued tensions would keep oil prices vulnerable to sharp rebounds at any time.
Has the Downward Correction in Oil Prices Begun?
In my view, yes. There are signs that a correction in oil prices has already begun, but I would not yet consider it the start of a long-term bearish trend.
Data pointing to continued oil tanker activity, including the presence of supertankers carrying around 14 million barrels at Saudi export ports over the weekend, provides an important signal to the market that some concerns over supply shortages are beginning to ease.
I believe the continued flow of oil supplies will be the key factor in the next phase. If tanker traffic remains stable and risks surrounding the Strait of Hormuz continue to decline, WTI crude oil prices could face additional downside pressure and enter a gradual repricing phase.
On the other hand, if diplomatic efforts fail or new security developments disrupt shipping activity, the outlook could change rapidly. The geopolitical risk premium could rise again, potentially triggering a strong rebound in oil prices.
Oil Price Forecast: Where Is WTI Crude Oil Heading?
In my assessment, the short-term oil price outlook is leaning bearish, but I believe the $90 level represents a key test for the market.
A break below $90 and sustained trading beneath this level would, in my view, be more significant than a temporary decline. Such a move could encourage more sellers to enter the market and push WTI crude oil prices toward lower levels.
At the same time, I do not believe the bullish scenario has completely disappeared. Oil continues to face elevated geopolitical risks, and any actual disruption to supply flows could quickly reignite oil prices.
Therefore, I expect WTI crude oil to remain highly sensitive to upcoming headlines, with downside pressure likely to prevail as long as the diplomatic process continues and oil tanker traffic remains stable.
What Do I Expect for Oil Prices in the Next Phase?
In my view, the next move in crude oil prices will be determined by three key factors: developments in U.S.-Iran negotiations, the actual state of shipping activity through the Strait of Hormuz, and the sustainability of oil flows from the Gulf region.
I believe that simultaneous improvement in all three factors would give the market more room to continue its correction.
At the same time, I cannot rule out sharp bullish rebounds, as the market is still operating in a highly sensitive geopolitical environment.
Therefore, my outlook is not based on a straight-line decline in oil prices. Instead, I expect a period of elevated volatility with a gradual bearish bias if signs of a de-escalation in the crisis continue. Conversely, any sudden escalation could quickly reverse this dynamic.
My Outlook for the Oil Market
In summary, WTI crude oil is facing a crucial test around the $90 level. At present, I lean toward the view that continued diplomatic progress and improving supply flows will keep oil prices under pressure.
A break below $90 and sustained trading beneath this level would be an important development that could increase the likelihood of a continued correction. Meanwhile, a strong move back above $90 would indicate that buyers remain capable of defending oil prices.
For me, the real indicator for the next phase will not be political statements alone, but rather oil tanker movements, export volumes, and the continuity of safe shipping through the Strait of Hormuz.
Therefore, I expect oil markets to remain highly volatile, with WTI maintaining a bearish bias as concerns over supply disruptions ease. Nevertheless, I will keep the door open to a sudden bullish scenario if geopolitical tensions return or there are signs of disruptions to global oil flows.
