Oil prices are currently oscillating around the $100 mark, influenced by conflicting signals regarding the potential for de-escalation in the Middle East. The market is reacting to statements from both Iranian and U.S. officials.

Trump Signals Potential for Conflict Resolution

President Trump indicated that a potential conflict with Iran could conclude soon, suggesting the Strait of Hormuz could remain open within two to three weeks. This statement, building on earlier reports, contributed to a downward reaction in oil prices as risk assets rebounded.

Iran's Position and Regional Tensions

Reports also suggest Iranian officials may be open to dialogue. However, the situation remains volatile, with Iran reportedly launching missile strikes at Israel during Passover preparations. This action underscores continued tensions and uncertainty surrounding Iran’s intentions.

Iran will no doubt make sure of that so that there is no return to hostilities.

Strait of Hormuz Remains a Key Factor

Despite Trump’s suggestion that countries should “just take” oil from the Strait of Hormuz, the market reaction was muted. The global energy shock will persist as long as the Strait of Hormuz remains effectively closed to the U.S. and its allies.

Oil prices will not fall back much and could even climb further if the Strait of Hormuz doesn’t open.

WTI Crude Futures Performance

WTI crude oil futures fell for the second consecutive day, dipping below the $100 per barrel level. This level had previously acted as strong resistance since mid-March. Currently, reclaiming the $100 level is crucial for further price increases.

Support Levels and Potential Upside

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.

If oil prices go back and remain above $100, the upside risks are going to come back into focus again.

Iran's Economic Strategy

Iran’s priority appears to be maximizing economic pressure and maintaining elevated energy prices. Recent attacks on regional shipping demonstrate Tehran’s determination to retain leverage. The probability of U.S. ground troops being deployed has slightly decreased, allowing investors to consider a potentially less aggressive path forward.

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.