As Geopolitical Premiums Fade, the Market Returns to Fundamentals; Focus Turns to the Battle for the $70 Level

Summary:

As tensions in the Middle East ease and shipping through the Strait of Hormuz gradually returns to normal, international crude oil prices have largely surrendered all gains generated by recent geopolitical conflicts. However, after the extreme volatility seen in recent weeks, the medium-term structure of the oil market has changed. With supply risks not fully eliminated and global demand expectations still divided, the $70 level is likely to become a critical battleground that determines the next directional move.

BUY WTI

EXP

TRADING

69.721

Entry Price

98.500

63.800

71.496 +0.211 +0.30%

0.0

Pips

Flat

63.800

Exit Price

69.721

Entry Price

98.500

Fundamentals

International crude oil prices remained under pressure on Thursday, falling back to levels seen before the outbreak of the U.S.-Israel-Iran conflict. Brent crude futures settled down 4.3% at $73.74 per barrel, while WTI crude futures fell 3.9% to $70.34 per barrel.

The latest wave of selling was primarily driven by the rapid unwinding of geopolitical risk premiums. As more previously delayed oil tankers successfully passed through the Strait of Hormuz, concerns over potential supply disruptions eased significantly. Shipping data indicate that traffic through the waterway is gradually recovering. Although volumes remain below pre-conflict levels, the probability of a worst-case supply shock has declined considerably.

Meanwhile, market attention has shifted back to underlying supply-and-demand fundamentals. Global crude inventories remain relatively tight, OPEC+ continues to manage production levels, and U.S. shale output growth has slowed. Together, these factors continue to provide a degree of support for oil prices.

However, uncertainty on the demand side remains a key challenge. Concerns persist regarding a potential slowdown in U.S. economic growth, weakness in European manufacturing activity, and a less-than-expected recovery in demand across parts of Asia. As geopolitical risks fade into the background, demand expectations are once again becoming the dominant driver of oil market sentiment.

In the near term, the crude oil market appears to be transitioning from a “risk-driven” environment back to one based on fundamental pricing. Without a new supply shock, further upside in oil prices will likely require clearer signs of strengthening global demand.

As Geopolitical Premiums Fade, the Market Returns to Fundamentals; Focus Turns to the Battle for the $70 Level_1

Technical Analysis

From a daily chart perspective, WTI crude has undergone a sharp correction after reaching a recent high, with prices now retreating toward the key support zone around $70 per barrel.

Despite the magnitude of the pullback, prices remain within a medium- to long-term ascending channel. The previous geopolitical rally successfully reversed the weak consolidation pattern that had dominated the market for several months and helped establish a higher trading range for crude oil.

The $70–$68 area currently represents a critical support zone. This region served not only as a major consolidation platform but also as the launch point of the latest rally. If prices can stabilize above this zone, the medium-term bullish structure would remain intact, opening the door for a renewed advance toward the $75–$80 resistance area.

On the upside, $75 represents the first significant resistance level. A sustained breakout above this area could pave the way for a move toward the psychological $80 mark. Should supply concerns re-emerge, oil prices could potentially extend gains toward even higher targets.

On the downside, a decisive break below $70 could trigger additional profit-taking and expose the market to further declines toward $68 and potentially the $65 area.

From a momentum standpoint, the Stochastic Oscillator has entered oversold territory, suggesting that bearish momentum may be nearing exhaustion. At the same time, the Relative Strength Index (RSI) continues to approach oversold levels, indicating a noticeable slowdown in downside momentum.

Should both the Stochastic and RSI develop bullish divergences or generate simultaneous bullish crossover signals, it could suggest that the current correction is approaching its final stage and provide the foundation for a technical rebound.

Overall, WTI remains under short-term corrective pressure. However, as long as the key support area around $70 holds, the medium-term bullish structure is likely to remain intact.

Trading Recommendation

Trading Direction: Buy

Entry Price: 68.50

Target Price: 98.50

Stop Loss: 63.80

Valid Until: July 24, 2026, 23:55

Support Levels:67.87\63.59\60.73

Resistance Levels:76.86\78.00\81.57

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