Brent crude oil extended its losing streak to a sixth consecutive session on Wednesday, sliding to its lowest level since September 8 and marking a 10% decline from its peak earlier this month. The global benchmark's retreat comes as diplomatic signals between the United States and Iran raised hopes of a potential easing in supply disruptions, though analysts caution that the bull run may not be over yet.
US-Iran talks fuel optimism
Officials from Washington and Tehran held lengthy discussions in New York on Tuesday, with Iran reportedly outlining its conditions for reopening the Strait of Hormuz. Among the demands, Tehran is pressing the US to return to the Memorandum of Understanding (MoU), which would include ending hostilities on all fronts, lifting the blockade, and releasing frozen Iranian assets. The talks come amid deep mutual distrust, as both sides have engaged in strikes during previous negotiation windows.
Market participants are also watching for potential intervention from China, a major Iranian trading partner. Expectations are growing that President Trump may urge President Xi Jinping to mediate in the conflict, a move that could influence oil flows and pricing dynamics.
Goldman Sachs sees subdued China demand
Goldman Sachs analysts project that China's oil imports will remain subdued in the coming months, particularly if prices stay elevated. The bank forecasts a moderate increase of about 600,000 barrels per day in the fourth quarter, a pace that would help cap any sharp surge in crude prices. This outlook adds a bearish note to the demand side, even as supply risks persist.
Supply risks remain substantial
Despite the recent pullback, crude oil prices face significant upside risks. The US-Iran conflict could extend for months or even years, limiting Middle East flows. Additionally, Saudi Arabia's output remains constrained due to ongoing fighting with Ansar Allah, and the East-West pipeline is still shut. Even if reopened, the pipeline could be vulnerable to attacks from regional groups.
Meanwhile, oil inventories have been declining. The Energy Information Administration (EIA) report due later today is expected to show a drawdown of 700,000 barrels last week, up from the previous week's 640,000-barrel decline. These inventory draws suggest underlying tightness in the market.
Technical outlook: pullback or reversal?
From a technical perspective, Brent crude remains above an ascending trendline that connects the lows of July, August 5, and August 25. The price is also holding above the 50-day Exponential Moving Average (EMA), and the Supertrend indicator remains bullish. The Relative Strength Index (RSI) has cooled from a high of 76 to the current 51, indicating that oil is no longer overbought but has not yet reached oversold territory.
This setup suggests that the most likely scenario is a further dip toward the trendline—potentially around $95—before a bounce resumes the broader uptrend. However, a break below that support could signal a deeper correction.
This article is for informational purposes only and does not constitute financial advice.
