$XTIUSD ‌

$XTIUSD ‌
WTI crude oil fell below $81. We hadn't seen this price in four months.
To understand this, we need to go back to February 28.
On that day, when the conflict began, oil was around $65. The Strait of Hormuz was closed. 20% of the global oil supply passes through this strait, approximately 21 million barrels per day. Gulf countries had to cut production by 10 million barrels per day because their storage capacities were full. The International Energy Agency described it as the largest oil supply cut in history and decided to release 400 million barrels of strategic reserves to member countries.
In early April, WTI rose to $112. This was the highest level seen since 2022 and an increase of nearly 70% compared to the pre-conflict period. This single figure reshaped global inflation, central bank decisions, and the crypto market.
Now this process is reversing. And the speed of the reversal surprised the markets.
The agreement was signed. The strait was opened. WTI immediately dropped below $81. This represents a pullback of approximately 28 percent from the April peak. The impact of a single geopolitical development on oil has been this rapid and this profound.
So what's behind this price movement and where might it go?
First, the erosion of the risk premium.
The price of oil always consists of two components: the actual supply-demand balance and the geopolitical risk premium. During this conflict, the risk premium was estimated to be between $25 and $35. Even if the strait hadn't opened, the underlying balance would have been in the $75 to $85 range. With the agreement, this premium quickly began to erode. $81 is the first stop in this transition.
Second, supply recovery.
Gulf producers had reduced their capacity. As the strait opens, this capacity will be brought back online. Fitch analysts predict a supply surplus by the end of the year, potentially reaching the fourth quarter of 2026. The year-end target for the average Brent price is around $87. WTI will likely trade a few dollars below that.
Third, OPEC's stance.
During the conflict, OPEC suspended its decision to increase production. When the Bosphorus opens, this discussion will be back on the table. If OPEC increases production, a surplus will form faster, and the price could be pulled down further. We need to monitor this development.
Now I'm following the chain reaction of this oil movement.
As energy costs fall, inflation falls. The May CPI was announced at 4.2%, and more than 60% of that came from the energy component. If the energy component starts to decline in the June and July data, annual inflation will soften rapidly. This opens up the Fed's room for maneuver. Goldman Sachs had removed the 2026 rate cut scenarios from its model. If oil stays around $80, this view will change.
And from here I connect to crypto.
Throughout this conflict, Bitcoin moved inversely proportional to the Iranian tension. It sold with every escalation and bought with every softening. This was a completely macro-driven correlation. As oil falls, inflation expectations decline, the Fed's interest rate cut window opens, risk appetite returns, and crypto breathes in this environment. But I don't want to make an overly simplistic reading here.
$81 is the initial reaction immediately after the agreement. The strait is physically open, but it will take time for the infrastructure, which was down for 10 weeks, to fully come back online. Insurance costs won't return to normal immediately. Some tanker operators won't transit without a risk assessment. And Israel's opposition to the agreement doesn't completely eliminate uncertainty.
Therefore, $81 is probably a transit point, not a floor.
As the real supply recovery begins, the price will seek an equilibrium between $75 and $80. If OPEC increases production, the $70-$75 range is also on the table. IEA and Fitch analysts see the long-term equilibrium as $85-$90, until a supply surplus occurs.
I'm watching this picture because the direction oil is going determines the direction inflation is going, the direction inflation is going determines the direction the Fed is going, and the direction the Fed is going determines the direction crypto is going.
Right now, this chain is turning in a positive direction.
I'm holding my positions in Gate. If oil stays below $80, the July CPI data will show a strong softening. When that data is released, the market will start pricing in the Fed again. And markets always price in expectations before the actual decision. I want to be prepared with that expectation in mind.

This content is for informational purposes only and does not constitute financial advice.

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