Oil Extends Losses for Third Straight Session
West Texas Intermediate (WTI) crude fell to around $87.20 per barrel during Asian trade on Friday, marking a third consecutive session of declines. The ongoing slide reflects easing geopolitical risk premium as diplomatic signals between the US and Iran point toward a possible ceasefire extension.
What’s Driving the Selloff
Oil markets have been pricing in a risk premium tied to Middle East tensions, particularly around the Strait of Hormuz โ a critical shipping chokepoint for global crude supply. Progress toward a US-Iran ceasefire reduces the perceived threat to that supply route, prompting traders to unwind long positions built on conflict risk.
Why Australian Traders Should Pay Attention
For Australian traders, the WTI decline carries several implications. ASX-listed energy stocks โ including Woodside Energy (WDS) and Santos (STO) โ tend to track global oil benchmarks closely, meaning sustained weakness in crude could weigh on their share prices. The AUD/USD pair also carries indirect exposure, as commodity price softness can dampen the Australian dollar’s appeal as a commodity-linked currency.
What to Watch Next
Traders should monitor whether ceasefire talks produce a formal agreement or stall โ any breakdown in diplomacy could quickly reverse the current selloff. The next key data point is the weekly US crude inventory report, which will indicate whether softer demand or supply shifts are compounding the geopolitical-driven price move. A sustained hold below $87.00 would confirm near-term bearish momentum.
Directional bias: Bearish short-term โ easing Iran tensions are removing a key support for prices, and without a fresh supply disruption catalyst, WTI faces further downside pressure toward the $85.00 region.
Source: FX Street