Weekly Oil Outlook - Geopolitical Risk Sets Tone for Crude Oil Futures

Author: James Hyerczyk

Updated: February 09, 2026

Key Points

• Ongoing Iran–United States negotiations are keeping crude oil prices stable as traders evaluate supply risks in the Strait of Hormuz.
• A breakdown in talks could lead to increased military tensions and a surge in crude oil prices.
• Conversely, a successful agreement may result in a significant drop in prices as supply concerns ease.

Current Market Overview

West Texas Intermediate (WTI) crude oil futures experienced a decline last week, closing at $63.55, down $1.66 or -2.55%. The market remains cautious due to potential supply disruptions, particularly with the U.S. Navy's presence in the Strait of Hormuz. The recent diplomatic discussions between the U.S. and Iran, mediated by Oman, have contributed to a neutral market sentiment.

Negotiation Dynamics

The outcome of the U.S.-Iran talks is uncertain, which is reflected in the market's price movements. An Iranian diplomat described the discussions as "good," which has helped stabilize prices. However, the risk of a collapse in negotiations remains, potentially leading to military action by the U.S. and retaliatory measures from Iran, including threats to block the Strait of Hormuz, a critical passage for global oil supply.

Supply Risk Analysis

The current situation hinges on supply dynamics. If negotiations fail and military action ensues, crude oil prices could surge by $10. Conversely, a successful agreement could lead to a price drop of $5 to $10 as fears of supply disruptions diminish.

Influencing Factors

Additional factors affecting crude oil prices include the strength of the U.S. Dollar, which is influenced by labor market data and Federal Reserve expectations. A weaker dollar may boost demand for dollar-denominated oil, while a stronger dollar could suppress it. Traders are also monitoring U.S. inventory levels, which have shown unexpected declines, providing some support to prices.

Technical Outlook

The technical analysis suggests a range-bound trading environment with an upside bias. The market is currently above the 52-week moving average at $60.62, indicating support. Resistance is identified in the $64.91 to $67.32 range, which has previously halted upward momentum.

Looking Ahead

In the upcoming week, the focus will remain on the progress of U.S.-Iran negotiations. Any announcements regarding a deal could exert downward pressure on prices, while a failure in talks may reignite concerns and lead to increased buying driven by war premiums.

Conclusion

The geopolitical landscape surrounding crude oil remains volatile, with the potential for significant price movements based on diplomatic developments. Traders should remain vigilant and prepared for rapid changes in market sentiment.