Oil prices are falling sharply as markets aggressively unwind the geopolitical risk premium built on tensions in the Strait of Hormuz. Brent crude has now broken below the psychologically important $100 level, while WTI is sliding rapidly toward the $90 area, as diplomacy suddenly replaces disruption as the dominant market narrative.
The catalyst was an Axios report stating that the White House believes the US and Iran are close to finalizing a one-page, 14-point memorandum of understanding designed to formally end the conflict and establish a framework for broader nuclear negotiations. Iranian officials later confirmed they were “evaluating” the US proposal, reinforcing hopes that negotiations are entering a decisive phase.
The development follows President Donald Trump’s abrupt decision earlier to pause “Project Freedom,” the US naval operation aimed at forcing open the Iranian-controlled Strait. That pause was initially interpreted as a tactical de-escalation move, but the Axios report now suggests it may have been part of a broader diplomatic pivot already underway behind the scenes.
Technically, immediate focus is now on 61.8% retracement of 86.09 to 115.30 at 97.25. Firm break there will pave the way back to 86.09 key structural support. Meanwhile, further fall would now be in favor as long as 55 4H EMA (now at 106.89) holds, in case of recovery.
The broader implication is that markets are shifting rapidly from “war pricing” toward “normalization pricing.” That does not mean risks have disappeared completely. The proposed agreement is still preliminary, Iranian internal divisions remain a concern, and negotiations could still break down. But for now, traders appear increasingly convinced that the worst-case supply shock scenario is becoming less likely.
