A week of whiplash
Crude oil capped off a wild January by handing back most of its gains in a single session. West Texas Intermediate dropped more than 4.8% on Monday to settle near $62 a barrel, the steepest daily fall since June, after President Trump said Iran is "seriously talking" with Washington. Brent crude fell 4.7% to roughly $66.
Just days earlier, WTI had touched $69.60, a six-month high built on fears that US warships, Iranian live-fire drills, and fresh sanctions could choke the Strait of Hormuz. That risk premium, estimated by Citi at $3 to $4 a barrel, vanished almost overnight once formal negotiations were confirmed for Istanbul this Friday.
The chart says lower
Look past the headlines and the technical picture has been bearish for months. On the daily chart, WTI is tracing a descending triangle, a pattern defined by lower highs pressing against a flat support floor near $56.20. The 100-day simple moving average sits below the 200-day SMA, and both are acting as ceilings on any rally.
Monday’s bounce off $62 ran straight into the descending trend line and stalled. Stochastic oscillators have already rolled over from overbought territory, leaving room for another leg down before reaching oversold levels.
A clean break below $56.20 would open the door to $50, a level WTI has not traded at since late 2021. EIA forecasts lend weight to that scenario: the agency projects WTI will average $52 a barrel in 2026, down from $65 last year, as global liquid-fuel production grows by 1.4 million barrels per day.
Geopolitics keeps punching back
Charts, though, don’t account for missiles. Hours after the Iran sell-off, the Pentagon confirmed it had shot down an Iranian drone, snapping the de-escalation narrative before it could settle in. Traders who had sold the peace talk quickly reconsidered.
The January rally was stacked with similar jolts. Venezuelan sanctions, a winter storm that cut US output by 2 million barrels a day, and drone strikes on tankers near the Caspian Pipeline Consortium terminal in the Black Sea all fed a risk premium that refused to die quietly.
Jeff Currie, chief strategy officer at Carlyle, called the environment a “recipe for a spike in prices” and flagged that options traders were paying the biggest premiums for bullish contracts since last year’s airstrikes on Iran.
OPEC+ adds a third variable
Between the bearish supply math and the bullish geopolitical noise sits OPEC+. The group reaffirmed on Saturday that it will hold output steady through March, the final month of a three-month production freeze.
What happens in April matters more. If the alliance begins unwinding its 2.2 million barrels per day of voluntary cuts, it would add supply into a market that a Reuters poll of analysts already expects to be oversupplied. WTI’s average forecast for 2026 sits at $58.72 in that survey; well below Monday’s close.
But if Iran talks collapse and Hormuz shipping risk flares again, OPEC+ has an incentive to hold steady and let prices run. Saudi Arabia’s fiscal breakeven sits above $80 a barrel, meaning Riyadh still has every reason to keep barrels off the market.
What to watch
Three things will determine whether the triangle breaks down or up:
- Istanbul talks on Friday. A framework deal would strip the remaining risk premium and push WTI toward the $56 support floor. A breakdown in talks would do the opposite.
- OPEC+ April guidance. Any signal that the production pause will extend into Q2 would support prices; an unwinding timeline would not.
- The $56.20 line. Technical traders are watching this level closely. A weekly close below it could trigger a cascade of stop-loss selling toward $50.
For now, oil sits in no-man’s-land — too cheap for geopolitical risk, too expensive for the supply outlook. Something has to give.