The Market Is Pricing in an “Interim Deal”

Summary:

Donald Trump hinted that a second round of U.S.-Iran talks could take place in Islamabad within the next two days, pushing WTI crude down to the $85.00 level. The market believes the war premium is fading and increasingly expects negotiations to extend the ceasefire or lead to an “interim agreement.”

BUY WTI

EXP

TRADING

89.668

Entry Price

151.000

80.000

90.215 +1.974 +2.24%

0.0

Pips

Flat

80.000

Exit Price

89.668

Entry Price

151.000

Fundamentals

Market sentiment in the energy sector improved after Trump suggested that a second round of U.S.-Iran talks could be held in Islamabad within the next 48 hours. As a result, WTI crude briefly declined toward the $85.00 mark. This price action reflects a rapid unwinding of the geopolitical “war premium,” as investors increasingly anticipate that negotiations may extend the current ceasefire or even produce an interim agreement aimed at de-escalation.

The next 48 hours are seen as a critical window. With the current ceasefire set to expire in about a week, the outcome of the second round of talks carries significant weight. A breakdown in negotiations could quickly reignite escalation concerns; however, the prevailing market view leans toward a ceasefire extension.

Notably, traders are not pricing in a comprehensive resolution but rather an “interim deal.” The consensus expectation is that both sides may seek a compromise on uranium enrichment, potentially landing between the U.S.-proposed 20-year freeze and Iran’s counterproposal of a 5-year limit.

At the same time, the market’s assessment of tensions in the Strait of Hormuz is evolving. Despite strong rhetoric, no actual blockade has disrupted global supply chains. Instead, recent developments are being interpreted as calibrated pressure tactics designed to avoid immediate escalation.

Another factor supporting optimism is the role of Pakistan’s Army Chief, Asim Munir. Trump’s public praise has reinforced expectations that the upcoming talks will be more structured and outcome-oriented, boosting confidence in the likelihood of a technical compromise.

Potential Impact:If an interim agreement is reached—possibly accompanied by a 45-day extension of the ceasefire—the implication for the market is clear: further downside in oil prices. Such an outcome would significantly reduce supply disruption risks and could drive WTI toward the $80.00 per barrel level. It is important to note that $80.00 does not represent a “peace price,” but rather a recalibration reflecting a reduced war premium.

The Market Is Pricing in an “Interim Deal”_1

Technical Analysis

WTI crude has completed a head-and-shoulders transition on the short-term timeframe, confirming a bearish reversal of the prior uptrend. This pattern suggests that the market may continue to fluctuate, with price action likely to retest key inflection points within the broader range.

The 38.2% Fibonacci retracement is at $93.38, the 50% level at $95.89, and the 61.8% level at $98.50. These levels may act as potential resistance during rebounds. Meanwhile, sellers may look to re-enter on corrective bounces. We believe the consolidation from the recent peak is far from over, favoring a range-trading approach of selling highs and buying lows.

Trading Strategy

Direction: Buy

Entry: 88.00

Target: 151.00

Stop Loss: 80.00

Valid Until: 2026-05-14 23:55

Support: 89.86, 86.10, 83.89

Resistance: 95.28, 98.16, 101.04

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