US-Iran war: Oil prices retreated from recent highs on Wednesday, 27 May, giving up part of the previous session’s 4% rally as traders looked for more clarity on the complex Iran-US negotiations following renewed tensions that hindered efforts to reopen the Strait of Hormuz.
Brent crude futures declined by $1.42, or 1.43%, to $98.16 per barrel, while US West Texas Intermediate (WTI) crude dropped $1.66, or 1.77%, to $92.23 per barrel.
Back home, crude oil prices on Multi Commodity Exchange (MCX) also witnessed a downward movement, tracking global prices. MCX crude oil prices fell over 2% to ₹8,840 per barrel.
What’s driving crude oil prices today?
According to a Bloomberg report, US Secretary Marco Rubio said that reaching a peace agreement could still take several days. At the same time, US forces carried out strikes near the Strait, while the Islamic Revolutionary Guard Corps claimed it targeted several US aircraft after they allegedly entered Iranian airspace.
The Strait — a crucial maritime route that handles roughly one-fifth of global oil and liquefied natural gas shipments during normal times — remains largely closed due to blockades imposed by both the US and Iran. Still, at least two non-Iranian supertankers passed through the chokepoint on Tuesday, marking the first instance in a week of nearly 4 million barrels of non-sanctioned crude moving across the route.
In the US, Donald Trump is set to hold a Cabinet meeting at the White House on Wednesday as major hurdles persist in negotiations with Iran, including Tehran’s $24 billion in frozen assets and its hesitation to permit unrestricted passage through the strait, according to a Bloomberg report.
“Oil markets remain on edge today, with both benchmarks retreating nearly 2%, leaving Brent trading below $98 per barrel and WTI slipping under $92 per barrel as investors weigh tentative signals of diplomatic progress against a backdrop of fresh military exchanges and unresolved sticking points that continue to cloud any near-term resolution. The cautious tone follows a sharply divergent Tuesday session, in which Brent surged more than 3.5% to settle at $99.58 per barrel after US forces struck missile launch sites and vessels in southern Iran suspected of preparing to deploy mines in the waterway, a move that cast doubt over the trajectory of peace talks,” said Kaynat Chainwala, AVP – Commodity Research, Kotak Securities.
Crude oil price outlook
Chainwala further added that despite heightened volatility, oil prices remain on track for a monthly decline, having shed much of the risk premium built into the market during the sharp rally seen across March and April.
“Technically, WTI is supported near $86, with a sustained break below that level potentially exposing $78, while resistance is seen near $95 and then $102. Brent faces resistance around $100 and $105, while support lies in the $85–90 zone,” she said.
On the technical outlook, Ponmudi R, CEO of Enrich Money, said that MCX Crude Oil is trading within the ₹8,700– ₹8,750 zone, near the lower end of the ascending trend-line structure that continues to provide structural support, though MACD and broader technical indicators reflect a persisting bearish bias.
“Immediate resistance stands at ₹8,800– ₹8,870; a sustained move above this zone could trigger a recovery toward ₹8,950– ₹9,000. On the downside, ₹8,650– ₹8,570 acts as immediate support; a break below this area could extend the decline toward ₹8,500– ₹8,450. The near-term bias remains cautious, driven by ongoing geopolitical developments,” Ponmudi added.
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