West Texas Intermediate (WTI) crude oil prices dropped below $85.50 on Tuesday, reaching their lowest level since August. The decline came amid growing optimism over diplomatic efforts to resolve the conflict between the US and Iran, despite ongoing attacks in the region. US President Donald Trump suggested that extensive strikes on Iran were unlikely if Tehran agreed to a strong deal. Meanwhile, Qatari officials reported progress in talks between the US and Iran, including a proposal to allow Iran to enrich uranium up to 3.67% and the potential release of $6 billion to $9 billion in Iranian assets if an agreement is reached.
Analysts noted that the diplomatic developments encouraged sellers, even as fighting in the Middle East continued. The Houthi group claimed responsibility for an attack on Saudi oil giant Aramco's office in Riyadh, though the impact was limited. Oil markets remain volatile as investors assess the potential for a diplomatic breakthrough, with reports indicating that Iran is reviewing proposals related to its nuclear program.
Technical analysis shows WTI with a bearish bias, trading below the 100-day simple moving average and the Bollinger Bands lower band. The Relative Strength Index (14) at 34.73 suggests persistent downside pressure. Key resistance levels are identified at $86.40 and $86.65, with significant structural caps at $96.35 and $106.05. Traders are likely to monitor prior price lows and psychological handles for potential demand.