Oil Market Plunges 7% on US-Iran Pause

The US-Iran military strikes pause has sent shockwaves through the oil market, causing a -7% drop in WTI crude oil prices. The temporary reprieve from hostilities has raised hopes that tanker traffic through the Strait of Hormuz can normalize, but shipments remain disrupted and refiners are facing difficulties securing reliable cargoes.

Iran's leverage over the strait remains its 'Trump card' in negotiations, making it unlikely to fully re-open the passage without concessions. Downstream supply is also tight, with US refineries operating near capacity and leaving the system vulnerable to outages during summer demand season.

Traders may continue to view short-term dips in oil prices as buying opportunities unless a durable peace deal is reached in the Middle East. Technical analysis suggests that if WTI breaks below $83.25, it could retrace to $80.00 or $77.00.