Oil Slides Toward $75 as Hormuz Deal Weakens the War Premium

Oil is coming under fresh pressure. WTI has slipped toward $75, while Brent is trading below $80 as progress on reopening the Strait of Hormuz eases fears of a prolonged supply disruption.

Iran and Oman have agreed on coordinates for a proposed shipping route through the strait, although a full reopening has not been confirmed. Questions over inspections, security and cargo fees are still unresolved.

That uncertainty hasn't stopped traders from taking risk premium out of crude. WTI is now on track for a weekly loss of more than 10%, a sharp reversal after the geopolitical shock pushed prices sharply higher.

Supply data is adding another bearish signal. US crude inventories unexpectedly rose by 2.5 million barrels, versus expectations for a 1.5-million-barrel draw, suggesting near-term demand may not be strong enough to absorb additional supply.

For WTI, $75 has become the immediate level to watch. Holding this area could trigger a short-term rebound, while a clean break below it would keep $72-$73 on the radar.

Still, oil's downside isn't completely straightforward. A confirmed reopening of Hormuz could accelerate the sell-off, but any setback in negotiations could quickly put the geopolitical premium back into crude.

For now, the market is trading the possibility of more oil reaching consumers rather than the conflict itself. The closer Hormuz gets to normal operations, the harder it becomes for bulls to justify a sustained premium above $80.