Brent crude dips under $74 amid Iran war fears

Crude oil prices are collapsing toward levels not seen since before the Iran war began, with the United States Oil Fund (AMEX:USO) dropping 4.58% on Saturday to 106.08, just a hair above its 52-week low of 105.65. The move reflects a rapid reassessment of the geopolitical risk premium that has defined energy markets for months.

At a Glance

• USO fell 4.58% to 106.08, within pennies of its 52-week floor of 105.65; the 52-week high is 154.08
• Brent crude dropped below $74 a barrel, down roughly 40% from its wartime peak near $118
• UAE oil exports have rebounded to about 85% of pre-war levels, reaching 4.3 million barrels per day in early June
• RSI on USO sits at 27.17, firmly in oversold territory
• President Trump has directed the Justice Department to investigate oil companies for price gouging at the pump

A 40% Collapse from the Wartime Peak

Brent crude, the international benchmark, traded below $74 a barrel on Wednesday, a level last seen before the Iran conflict started on February 28. That marks a decline of nearly 40% from the wartime high of around $118. US benchmark crude fell to $70.36 a barrel by mid-afternoon European time, still above the approximately $67 it traded at the day before the war began but moving steadily in that direction.

The speed of the retreat is striking. For months, the Strait of Hormuz disruption provided a near-constant floor for prices. That floor is cracking as the geopolitical calculus shifts.

Hormuz Traffic Recovering, Iranian Exports Potentially Returning

Tanker traffic through the Strait of Hormuz is the central supply story. Before the conflict, the strait handled roughly 125 to 140 vessel crossings per day, carrying around 20 million barrels of oil and petroleum products, equal to about a quarter of global seaborne oil trade. That flow was severely disrupted during the war months. Traffic is now recovering, though analysts note it has not yet returned to pre-war norms.

The International Energy Agency reported that UAE oil exports rebounded to nearly 85% of pre-war levels in early June, reaching approximately 4.3 million barrels per day. That compares with just 1.9 million barrels per day in March, when disruption was near its worst. The scale of the recovery in Gulf energy flows is the primary mechanical driver behind the price retreat.

Beyond the Hormuz recovery, traders are pricing in another possibility: Iranian crude returning more fully to global markets. Progress in US-Iran peace talks, combined with a temporary sanctions waiver, has analysts and traders reconsidering how much Iranian supply could re-enter the market. Reuters reported that this expectation is contributing to the latest leg down in prices, compounding the effect of recovering tanker traffic.

Disagreements over nuclear inspections and the broader sanctions architecture remain unresolved, so the durability of any agreement is an open question. But the market is not waiting for a signed treaty to price in a more benign supply outlook.

Trump, the DOJ and the Pump Price Gap

President Trump injected a political dimension into the oil story on Wednesday, announcing via social media that he had directed the Justice Department to investigate oil companies for price gouging. His argument: gasoline prices are not falling as fast as crude oil prices, and consumers are being overcharged.

The numbers give some context. US crude has fallen sharply following the interim deal with Iran, yet retail gasoline is averaging $3.93 a gallon nationally according to AAA, down over the past month but not by as much as the crude decline would arithmetically suggest. Refining margins, logistics costs, and the timing lag between crude moves and pump prices all contribute to that gap, but Trump framed it simply as gouging and said prices "better start going down a lot faster."

Whether a DOJ inquiry produces anything concrete is a separate question. The political pressure is real, and oil company executives will be watching their public pricing decisions closely in the weeks ahead.

Dollar Strength and the Gold Signal

Gold fell below $4,000 per ounce on Wednesday for the first time since November 2025. The driver is a stronger US dollar combined with rising expectations for further Federal Reserve rate increases. A stronger dollar raises the effective cost of commodities priced in other currencies, reducing demand from non-US buyers.

The Fed signaled at its latest policy meeting that at least one more rate increase is possible before year end. Markets moved quickly: CME Group data put the probability of a rate hike this year at 85%, up from 60% just a week earlier. The 10-year Treasury yield held at 4.48%, keeping pressure on rate-sensitive assets including gold.

For crude oil, the dollar dynamic compounds the supply-side pressure. A stronger dollar makes oil more expensive for buyers outside the United States, which typically weighs on demand. With the Personal Consumption Expenditures index due Thursday, the Fed's preferred inflation gauge could shift rate expectations again and send another ripple through commodity markets.

Frequently Asked Questions

Why is USO near its 52-week low if oil was so high earlier this year?

USO tracks the price of West Texas Intermediate crude oil futures. The fund's 52-week high of 154.08 was set during the wartime spike, when the Iran conflict pushed Brent crude to around $118 a barrel. The subsequent peace progress and supply recovery have unwound most of that geopolitical premium, pulling USO back toward pre-war price levels.

What does an RSI of 27 mean for USO?

RSI below 30 is conventionally read as oversold, meaning the recent selling has been sharp enough that a short-term technical bounce is plausible. It does not predict direction on its own and says nothing about underlying fundamentals, which in this case remain bearish given recovering supply.

How much of global oil supply passes through the Strait of Hormuz?

Before the recent conflict, roughly 20 million barrels of oil and petroleum products transited the strait daily, accounting for approximately one quarter of all seaborne oil trade worldwide. The disruption during the war months was one of the most significant chokepoint events in recent oil market history.

What is the link between Federal Reserve policy and crude oil prices?

Higher US interest rates strengthen the dollar, which makes dollar-denominated commodities like crude oil more expensive for foreign buyers and can reduce global demand. Tighter monetary policy also signals slower economic growth, which presses on demand forecasts and tends to weigh on oil prices.

What Comes Next for Crude

The oil market is now pricing a world where Gulf supply disruption recedes and Iranian barrels potentially return. USO's RSI of 27 flags technical exhaustion, but the fundamental backdrop, recovering Hormuz traffic, rebounding UAE exports, Iranian re-entry expectations and a strong dollar, points toward continued price pressure unless the peace process collapses. Thursday's PCE data will set the tone for the dollar and rates, and either outcome lands on an already fragile crude market.