Oil posts its biggest single-day drop in six years as the Iran war pauses. These are the key levels to watch

Oil prices collapsed overnight after the United States and Iran agreed to a two-week ceasefire, sending Brent crude down as much as 16% in its largest single-day decline in nearly six years. The deal, brokered by Pakistan, includes a conditional reopening of the Strait of Hormuz and sets the stage for peace talks in Islamabad on Friday.

Here’s what you need to know:

• Brent crude gapped down from ~$102 to ~$92, crashing through several support levels in a single move
• WTI fell below $95, after trading as high as $117 earlier in the session before the deal was announced
• The Strait of Hormuz will reopen for two weeks under Iranian military coordination, restoring a route that carries roughly one-fifth of the world’s daily oil supply
• Peace talks are set for Friday in Islamabad, with Vice President Vance expected to lead the US delegation
• Despite the drop, oil remains up more than 70% year-to-date, and the two-week window leaves significant uncertainty over whether a lasting deal can be reached

The ceasefire came just hours before Trump’s self-imposed 8 p.m. ET deadline, after which he had threatened to strike Iranian power plants, bridges and civilian infrastructure. Iran’s Supreme National Security Council accepted the terms, with Foreign Minister Araghchi confirming that passage through the Strait would be permitted for the two-week period.

This is a classic supply and demand story. With the Strait of Hormuz effectively closed since early March, global oil supply was severely constrained while demand remained steady, driving prices higher. Now that the Strait is reopening, the supply bottleneck could ease, putting downward pressure on prices. However, the two-week timeframe means this could be temporary. If talks collapse, the Strait could close again, and prices would likely spike back toward the war-era highs.

When we last covered Brent crude, it had just posted its biggest monthly gain on record. The reversal since then has been equally dramatic, and the question now is whether this marks the beginning of a broader unwind of the war premium, or simply a brief pause before the next escalation.

4-hour chart analysis

The 4-hour chart shows Brent crude gapping down from $102 to $92 on the ceasefire announcement, with price now testing the 200 EMA and oversold RSI suggesting either a relief bounce or the start of a new downtrend.

The 4-hour chart tells a clear story. Brent crude gapped down from around $102 to $92 on the ceasefire announcement, slicing through the range that had contained price action for much of the past two weeks.

Price is now trading around the 4H 200 EMA, which is confluent with the $92 to $95 support zone. This area could act as a range low if buyers step in, but the nature of the move suggests caution.

The RSI has plunged deep into oversold territory, currently reading around 23. While oversold readings can signal a bounce, they can also mark the start of a new trend when driven by a fundamental shift. The reopening of the Strait of Hormuz is exactly that kind of shift. Increased supply flowing through the waterway directly addresses the core driver behind the rally, and extreme RSI readings in this context could reflect the beginning of a structural repricing rather than a short-term dip.

Key levels to watch:

• $92 to $95 — the current support zone, confluent with the 4H 200 EMA. Holding here could lead to a period of consolidation as the market digests the ceasefire
• $102 — the pre-gap level and former range. A reclaim of this level could suggest the sell-off was overdone, but that seems unlikely unless the ceasefire collapses
• $85 — the next major support below. If the $92 to $95 zone fails to hold, this becomes the downside target and could represent a full unwind of the March rally
• $110 to $114 — the war-era resistance zone. Only comes back into play if the ceasefire breaks down and the Strait closes again

For now, the path of least resistance appears to be to the downside. The fundamental picture has shifted, and while a short-term bounce from oversold conditions is possible, the broader bias has turned bearish for the first time since the war began.

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