Oil Prices May Remain Range Bound Near $100 Amid Mixed Signals on De-Escalation

• Oil falls on the hopes, but supply risks keep prices supported.
• Strait disruption keeps energy shock alive despite improving market sentiment.
• Oil above $100 may cap risk appetite and revive inflation concerns.

Oil prices fell further as risk assets extended their rebound from Tuesday, when President Trump confirmed earlier reports that he was willing to leave the Iran conflict with the Strait unopened within two-three weeks. Reports suggesting Iranian officials may be open to dialogue have also helped to trigger a downward reaction in oil prices.

But with oil supply still constrained and until the Strait of Hormuz remains effectively shut for the US and its allies, the global energy shock is not going to go away. Iran will no doubt make sure of that so that there is no return to hostilities.

Trump to Deliver More Details in Speech Later as Fighting Continues

Yesterday, Trump suggested that countries like the UK should build up the courage to go to the Strait of Hormuz and “just take” oil. Markets were only mildly impressed by this, and we saw a relatively modest decline in oil prices and equity indices held at prior levels, before those moves continued overnight.

At the time of writing, oil prices were coming back up a little off their earlier lows. Optimism about the war ending also helped to keep stock indices supported, ahead of Trump’s speech later today, where he is likely to provide more details about his country’s position and withdrawal plans from the conflict.

In the meantime, the conflict continues. The IRGC reportedly launched three waves of missiles at Israel on Wednesday morning, deliberately timed around Passover preparations. That keeps tensions elevated, as we are not sure exactly what Iran’s position is right now. By launching more strikes on US bases and allies, the war could drag on far longer than Trump and markets hope.

WTI Above $100 Could Keep Risk Appetite Downbeat

Trying to second-guess the White House is rarely a profitable exercise, but for now, markets appear willing to latch onto any hint of de-escalation. News that Trump is willing to end the conflict without reopening the Strait has offered some tentative support to risk appetite. Oil prices will not fall back much and could even climb further if the Strait of Hormuz doesn’t open.

It is clear that oil above $100 a barrel is a politically sensitive level in Washington. That may be why we have seen a softer tone from Trump. But if oil stays high, inflation risks will start creeping back into focus, and this will ultimately weigh on risk appetite beyond a short relief, keeping indices such as the S&P 500 under pressure.

Iran’s priority is clearly to maximise economic pressure and keep energy prices elevated. Recent actions, including attacks on regional shipping, underline just how determined Tehran is to retain leverage. But at least now the probability of US boots on the ground has slipped slightly. Investors can at least entertain the idea of a less aggressive path forward. But it is a glass-half-empty situation.

WTI Technical Analysis

WTI crude fell for the second day, breaking back below the key $100 per barrel level—an area that had acted as strong resistance since mid-March, before giving way on Monday. This level needs to be reclaimed now if oil prices want to push higher and apply fresh pressure on risk assets.

If oil prices go back and remain above $100, the upside risks are going to come back into focus again. At the same time, elevated oil prices could continue to weigh on risk assets or at least cap their upside.

A decisive move back below $100 would be needed to shift this outlook—and that would likely require further, meaningful de-escalation in the Middle East conflict. Supports at $95.45 and $92.50 on WTI futures will also need to give way to signal oil has formed a near-term top.

Only under those conditions could we adopt a more clearly bullish stance on broader risk assets.

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