Oil continues to fall: WTI drops below $76 as peace with Iran and the Fed keep markets on edge

Wednesday — a day when oil doesn’t know where to go

You wake up on Wednesday, open your terminal, and see that WTI crude is trading at $75.82 per barrel. That’s a 0.30% drop over a few hours. The session low is $75.52. Resistance is at $87.23, but it now feels so far away it might as well belong to another world.

Oil is down nearly 14% from its early June highs. It has broken below the $80 support level and is now hovering around $75–76. Brent is also declining — down to $78.78, -0.23%. The spread between the two benchmarks has widened to $2.96, suggesting that Brent still carries a geopolitical premium, albeit a small one.

What’s happening? Two main factors. First — a peace agreement between the US and Iran, which continues to pressure prices. Second — anticipation of today’s Federal Reserve meeting.

Oil is trapped. Peace with Iran is bearish for prices because Iranian crude returns to the market and the Strait of Hormuz reopens. But the Fed is a source of uncertainty. If Kevin Warsh turns out to be “hawkish,” the dollar will strengthen and oil will fall further. If he is “dovish,” the dollar will weaken and oil could find support.

For now — it’s a decline. A third straight session (after Monday and Tuesday). Oil is getting cheaper, and no one knows where the bottom is.

Let’s break down what’s driving this and where oil might go next.

Peace with Iran: the main driver of the decline

On Monday, oil plunged on news of a preliminary peace agreement between the US and Iran. On Tuesday and Wednesday, the decline continued, although at a slower pace.

Details of the agreement are becoming clearer. Iran is being granted the right to immediately resume oil exports. That means 1–2 million barrels per day could return to the market. With demand growing slowly (China recovering, Europe stagnating), this is significant downward pressure on prices.

In addition, the deal includes the resumption of shipping through the Strait of Hormuz. Insurance premiums are falling, and tankers can move without fear of attacks. This removes the geopolitical risk premium that was priced in during the conflict.

Recall that at the height of the crisis, Brent rose above $120 per barrel. Now it stands at $78.78 — a 35% drop from the highs. This is a major sell-off.

Markets are pricing in the return of Iranian supply and the reopening of the strait. But there’s a catch: the agreement has not yet been signed. The official ceremony will take place on Friday in Switzerland. Until then — two days remain. Anything can happen in that time.

So traders are not aggressively selling oil. They are waiting for confirmation.

The Fed: a factor of uncertainty

On Wednesday, June 16, the US Federal Reserve will hold its meeting. This is the first meeting under new chairman Kevin Warsh.

The Fed is expected to keep rates unchanged. That is predictable. What is not predictable is Warsh’s tone.

If Warsh signals a “dovish” stance (saying inflation is easing and the Fed may pause), the dollar will weaken. A weaker dollar supports oil because oil is priced in dollars, and it becomes cheaper for foreign buyers — boosting demand and prices.

If Warsh is “hawkish” (saying inflation remains high and the Fed is ready to hike), the dollar will strengthen. A stronger dollar pressures oil because it becomes more expensive for foreign buyers, reducing demand and prices.

Markets are currently pricing in a 49% probability of a December rate hike (CME FedWatch). A week ago it was 69%. The decline follows softer inflation data (core CPI came in weaker) and news of peace with Iran.

If Warsh confirms this shift, oil may find support. If he rejects it, prices could fall further.

Technical levels: support and resistance

Technically, oil is at a key crossroads. WTI has broken below $80 support and is now testing the $75.52 level (today’s session low).

The next support is $74. If WTI breaks below that, the path opens toward $70–72. Resistance is at $87.23 (the previous peak before the decline). Returning there would require a strong geopolitical shock — such as a breakdown in peace talks.

For now, oil is trading between these levels, closer to the lower boundary. Traders are unwilling to sell aggressively at $75 in case the deal collapses. But they are also unwilling to buy, because if peace is confirmed, oil could drop to $70–72.

This is a classic state of uncertainty — and it may last until Friday.

US inventory data: what will the EIA say?

On Wednesday, alongside the Fed meeting, the US Energy Information Administration (EIA) will release its weekly crude oil and petroleum inventory report.

In recent weeks, inventories have been falling due to strong gasoline demand (summer travel season) and reduced imports. If the decline continues, it could support prices despite geopolitical calm.

Analysts expect inventories for the week ending June 12 to have fallen by another 2–3 million barrels. A larger drawdown (4–5 million barrels) could trigger a price rebound. A surprise build would add downward pressure.

However, like often happens, EIA data will likely take second place to developments in the Persian Gulf and the Fed meeting.

The dollar: a quiet but important factor

The US Dollar Index (DXY) fell 0.02% on Tuesday to 99.30. A small move, but it reflects continued weakness that began on Monday.

On Monday, the dollar weakened on news of peace with Iran. Investors sold dollars and bought euros, pounds, and other currencies benefiting from reduced geopolitical risk.

On Tuesday and Wednesday, the decline continued, but more slowly, as investors awaited the Fed meeting.

A weak dollar supports oil. If the Fed turns dovish, the dollar will fall further and oil will gain support. If hawkish, the dollar will strengthen and oil will fall.

Brent–WTI spread

The Brent–WTI spread is currently $2.96. That’s higher than yesterday ($2.27) and higher than Monday ($2.85).

The widening spread suggests the market is pricing in higher Middle East risk. Brent is more sensitive to geopolitics because it reflects global balances, while WTI is more domestic (US-focused).

If the spread continues to widen (to $3.5–4), it would signal expectations of supply disruptions from the Persian Gulf. If it narrows ($2–2.5), it would signal confidence in peace.

At $2.96, the market is neutral — waiting.

Forecast: three scenarios for oil

Scenario 1 — bullish for consumers:
Peace with Iran is signed, the strait is open, Iranian oil returns, the Fed is dovish, the dollar weakens. WTI falls to $72–75 this week and $68–72 in coming months. Brent to $75–78.

Scenario 2 — neutral:
Peace is signed but implementation is delayed. The Fed stays neutral. The dollar is stable. WTI trades in a $75–80 range. Brent at $78–83.

Scenario 3 — bearish for consumers:
Peace collapses, Iran threatens the strait again, oil rises. The Fed is hawkish and the dollar strengthens, but geopolitics dominates. WTI returns to $85–90, Brent to $88–93.

Personally, weighing all factors, I lean toward Scenario 1. Too many sides are interested in peace. Risks of escalation remain high. But this is a bet — and it could be wrong.

Conclusion: oil is waiting for a signal

WTI is trading at $75.82 per barrel, down 0.30% on the day and over 6% since the start of the week.

The drivers are the Iran peace deal and anticipation of the Fed meeting.

Oil is sitting between support at $75.52 and resistance at $87.23, closer to the lower boundary.

Brent is at $78.78. The spread is $2.96.

Everyone is waiting. Traders don’t want to sell at $75 in case peace falls apart. And they don’t want to buy in case peace is confirmed and prices fall to $70–72.

Tension is rising. Silence is getting louder. The next 48 hours — Wednesday (Fed and inventory data) and Friday (deal signing) — will determine the direction of oil for weeks ahead.

For now — a pause. A heavy, tense pause that is worse than any storm. Because in a pause, all you can do is wait. And waiting is the hardest thing in trading.

But soon the silence will end. Warsh will speak. The deal will be signed. And then oil will either surge or collapse. Everyone is frozen. Waiting.