WTI slips below $85.50 amid growing hopes for US-Iran diplomacy

• Selling pressure pushes WTI towards $85.30 in early Asian trade on Tuesday, leaving it 4.95% lower on the day.
• Fresh attacks on Iran are highly unlikely to be ordered, Trump said.
• Crude oil prices come under pressure as hopes rise for a breakthrough in talks to end the US war in Iran.

Selling pressure has taken West Texas Intermediate (WTI) to its lowest level since August, with the US crude oil benchmark trading near $85.30 in Tuesday’s early Asian session. Optimism over diplomatic efforts to bring the Middle East war to an end is weighing on prices despite continued attacks across the region. The American Petroleum Institute (API) weekly crude oil inventory report, due later on Tuesday, is also on traders’ radar.

Over the weekend, US President Donald Trump described the prospect of ordering extensive strikes on Iran as “highly unlikely”. He nevertheless made this conditional on the country signing a “very strong agreement.”

To discuss taking US-Iran talks forward, Qatari Prime Minister and Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani met Trump and Vice President JD Vance in Washington, DC, he said on Monday.

According to an Al Arabiya source, a fresh Qatar-Pakistan proposal would enable Washington to allow Iran to enrich uranium on its own soil up to 3.67%, a limit Tehran would agree to observe. Aimed at restarting negotiations between the two countries, the initiative accompanies a US offer to release Iranian assets worth between $6 billion and $9 billion should an agreement be reached.

In a note, TACenergy analysts said: "This seems to have encouraged sellers on the prospects for peace even while the actual fighting is not slowing down,"

Separately, responsibility for Sunday’s attack on Saudi oil giant Aramco's corporate office in central Riyadh’s financial district was claimed by the Houthis. Debris from the attempted attack shattered windows on several floors, according to the Saudi energy ministry.

Can US-Iran diplomacy ease oil market volatility?

Assessing the diplomatic outlook, Commerzbank analysts say oil markets "remain volatile as investors assess whether the Democrats' control of Congress could accelerate diplomatic efforts to end the US-Iran conflict." Sentiment remains fragile, with the analysts adding that "reports that Iran is reviewing proposals concerning its nuclear programme offered some encouragement, although no comprehensive agreement has been announced and risks to Gulf shipping remain,"

Technical Analysis: Can WTI shake off its bearish bias below the 100-day SMA?

A bearish near-term outlook prevails for WTI US Oil on the daily chart, where prices remain below both the 100-day simple moving average (SMA) and the lower Bollinger Band. This positioning points to a breach of the recent volatility floor. Well above current prices sit the Bollinger Bands 20-period SMA and upper band, illustrating the scale of the pullback. Meanwhile, the Relative Strength Index (14), at 34.73, is approaching oversold territory, suggesting continued downward pressure rather than signalling a confirmed reversal.

The first upside hurdle is the 100-day SMA at $86.40. Close behind it, the lower Bollinger Band around $86.65 creates a narrow resistance cluster immediately above current prices. A more substantial structural barrier lies at the Bollinger mid-line of $96.35, followed by the upper band near $106.05, which sets a broader ceiling for a stronger corrective rebound. Below $85.30, the supplied indicators offer no clearly defined support levels, so traders are likely to turn to previous price lows and psychological levels to identify potential demand. As long as prices stay below these overhead technical barriers, the present set-up suggests that rallies remain vulnerable to selling.

(The technical analysis of this story was written with the help of an AI tool. Know more.)