Global Energy Crisis Avoids Worst Outcome as Oil Prices Stabilize Around $88

Over a century of days into the unfolding crisis, approximately one-fifth of the world's energy flows remain interrupted—a disruption characterized as among the most severe supply shocks ever recorded. Yet despite the magnitude of the disruption, the most dire scenarios have not materialized.

Crude oil has settled in the vicinity of $100 per barrel, though market watchers caution that prolonged closure of the Strait of Hormuz could send prices spiraling above $200, with potentially devastating consequences for the global economy. The strategic passage accounts for roughly 20% of international energy supplies.

Multiple nations have begun drawing down their strategic petroleum reserves to manage price pressures, while producing countries have pursued alternative export routes. Simultaneously, softer global demand has provided some downward pressure on prices. Yet these reserve stockpiles continue to diminish gradually.

The OECD has signaled that economic repercussions from the crisis may extend through 2027, even in the event of an immediate conflict resolution.

Market Developments

West Texas Intermediate crude declined 1.8% to approximately $88.10 during European trading on Tuesday, representing a more than 6% drop from Monday's peak of $93.50.

This pullback followed Monday's sharp sell-off, triggered by Iran's announcement that it would cease military operations against Israeli targets following a call from US President Donald Trump urging both nations to halt their reciprocal military strikes.

Earlier Monday, crude had surged on renewed concerns about regional escalation and the potential for extended Strait of Hormuz disruptions. Military exchanges between Israel and Iran subsequently dampened expectations for an imminent comprehensive agreement between Washington and Tehran.

Tuesday's trading continued the downward momentum after Trump expressed optimism regarding Iran negotiations, suggesting they had reached advanced stages. According to reports, Trump indicated the Strait of Hormuz could reopen within two to three days should an accord be finalized.

Technical Analysis

WTI is currently trading near $88.10, with the short-term technical picture remaining bearish. The price sits below the 20-day exponential moving average at $92.16, while the Relative Strength Index registers at 42.83—below the midpoint on daily charts—signaling persistent downward pressure despite easing immediate selling intensity.

Resistance above appears at $92.16; a daily close above this level would be required to alleviate downward pressure and potentially allow movement toward the June 3 high of $94.87. Should declines accelerate below the May 29 low of $85.42, prices could target the April 17 low of $78.88.