WTI futures dipped below $90 a barrel on Thursday before rebounding above $93. Brent fell towards $95, then recovered to $100 after an intraday reversal.
Earlier losses followed reports that Iran was close to sending a response, via Pakistani mediators, to a 14-point US ceasefire proposal. The plan is a one-page memorandum that would end the war and open a 30-day period to negotiate nuclear enrichment, frozen Iranian assets, and security in the Strait of Hormuz.
Diplomacy And Strait Of Hormuz Risk
President Donald Trump referred to “very good talks” overnight, while also warning of strikes “at a much higher level and intensity” if Iran does not comply. Iran has linked further progress to lifting the US naval blockade, while the Islamic Revolutionary Guard Corps says Hormuz transit is subject to Iranian “new procedures”.
Maersk said one of its US-flagged vessels passed through the Strait of Hormuz under US Navy escort. Project Freedom escorts have been paused at a reported request from Pakistan and Saudi Arabia, while the US blockade on Iranian-bound shipping continues.
US petrol prices are about $4.54 a gallon, the highest since July 2022. QatarEnergy’s LNG force majeure and damage to regional energy infrastructure have not been reversed.
We are seeing a familiar pattern, reminiscent of the head-fake we witnessed during the Hormuz blockade back in 2025. While current headlines about renewed Black Sea grain deal talks are causing intraday dips, the physical market is telling a much tighter story. We should use any sentiment-driven weakness to position for higher prices, as WTI struggles to hold below $85 a barrel.
Supply Demand And Trading Strategy
The underlying fundamentals have not shifted in favor of lower prices. OPEC+ just confirmed it will roll over its 5.5 million barrel per day production cuts through the third quarter, removing any chance of a near-term supply surprise. Just this week, the Energy Information Administration (EIA) reported a U.S. crude inventory draw of over 4 million barrels, pushing stockpiles further below the five-year average.
On the demand side, fears of a slowdown are proving to be overblown. Recent data shows China’s crude imports have consistently exceeded 11.5 million bpd, defying earlier pessimistic forecasts for 2026. This resilient demand is creating a floor for prices that diplomatic chatter alone cannot break.
For the coming weeks, we should treat dips based on peace talks as buying opportunities for call options. Volatility is likely to remain elevated, meaning selling out-of-the-money puts on crude futures could also be an effective strategy to collect premium. The lesson from 2025 is clear: the physical market will ultimately win out over fleeting headlines.
