Commodities

Oil drops on easing US-Iran tensions and US dollar rebound

Nikos Tzabouras Written by Nikos Tzabouras

USOIL Analysis

US President Trump said over the weekend that Iran is "seriously talking to us", while expressing hope that Tehran will agree to a nuclear deal [1]. These remarks have raised optimism over an agreement, easing supply disruption risks, while diplomatic efforts to end the war in Ukraine continue.

Attention has turned back to oil glut risks, underpinned by the return of Venezuelan supply to the market. The United States has been scaling back sanctions while seeking to rebuild the country's infrastructure. At the same time, ongoing tariff threats sustain trade worries and fuel economic headwinds, weighing on oil consumption. Reflecting these dynamics, the International Energy Agency (IEA) expects supply growth to substantially exceed demand this year. [2]

Geopolitical de-escalation and lingering oversupply concerns have pushed oil prices lower. The move has been reinforced by a USDOLLAR rebound after the US President nominated a Fed insider to succeed Chair Powell [3], easing institutional concerns. Former Governor Warsh is seen as a less dovish pick, which could temper rate cut expectations.

USOil risks slipping below the EMA200, which would reaffirm the bearish outlook and bring last year's lows back into focus. For now, however, WTI is attempting to stabilise above the EMA200, keeping the door open for higher highs.

Despite unfavourable fundamentals, risks to oil flows could persist and the geopolitical premium could re-emerge. Tensions with Iran remain elevated, as the country's supreme leader warned of a "regional war" [4] and the US Navy has deployed ships to the region. Meanwhile, a Ukraine peace remains elusive despite diplomatic efforts.

At the same time, OPEC+ could support prices if needed, after reiterating its decision to refrain from output increases in Q1 [5]. While members could resume the unwinding of supply cuts, they offered no guidance and maintained a cautious stance. Meanwhile, dollar weakness could linger, as it is tied to broader de-dollarisation and debasement trends.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.

As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.

References

1

Retrieved 02 Feb 2026 https://www.youtube.com/watch

2

Retrieved 02 Feb 2026 https://www.iea.org/reports/oil-market-report-january-2026

3

Retrieved 02 Feb 2026 https://truthsocial.com/@realDonaldTrump/posts/115983891481988557

4

Retrieved 02 Feb 2026 https://x.com/khamenei_ir/status/2017886482887840191

5

Retrieved 03 May 2026 https://www.opec.org/pr-detail/1619589-1-february-2026.html

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