United States Oil Fund (AMEX:USO) traded at 103.98 dollars on June 28, up 0.69% on the day, but the ticker remains deep in a slump that has carved out a 52 week range between 102.42 and 154.08. The fund's relative strength index sits at 30.13, a level that typically signals oversold conditions and hints traders are betting the selloff in crude has run far.
The move tracks a sharp reversal in oil markets tied to the reopening of the Strait of Hormuz, the narrow waterway through which roughly a fifth of global crude supply normally passes. Former deputy national security advisor Victoria Coates addressed the situation on Fox Business, arguing that Iran's proposal to charge tankers a toll for transit amounts to what she called a blackmail scheme rather than a legitimate fee.
| Price | 103.98 USD |
|---|---|
| Day change | +0.71 (+0.69%) |
| 52-week range | 102.42 – 154.08 |
| RSI (14) | 30.13 |
| Volume | 2,212,654 |
Key Takeaways
- USO trades at 103.98 dollars, up 0.69%, with RSI at 30.13 suggesting oversold territory
- 121 tankers have crossed the Strait of Hormuz since operations resumed, easing supply fears
- U.S. gasoline has fallen 14.4% from its May peak of 4.50 dollars a gallon to 3.83
- WTI crude has dropped over 21% from mid June levels, closing near 71.87 dollars a barrel
- Gulf producers had shut in 10.5 million barrels a day during the closure, giving them reason to resist any toll scheme
Tanker Traffic Resumes and Prices Retreat
Coates pointed to the pace of shipping recovery as evidence the worst has passed. Since the Strait reopened, 121 vessels have made the crossing, a flow she described as proof the region wants normal trade restored, not a new tax regime. Gasoline prices have responded in kind, falling for six straight weeks and dropping from 4.50 dollars a gallon on May 11 to 3.83 dollars by June 29, a decline of roughly 14%.
Crude has fallen even faster than pump prices. WTI settled at 71.87 dollars a barrel on June 29, down 21.2% from levels near 91 dollars in mid June. Brent crude followed a similar arc, closing at 71.59 dollars, a steep retreat from the 138.21 dollar peak hit on April 7 when the closure was at its worst.
Why the Toll Proposal Faces Long Odds
Coates argued the Strait is international water that Iran does not maintain, which undercuts any legal basis for charging passage fees. She also noted that Gulf producers, including Saudi Arabia, Kuwait, the UAE, Qatar and Bahrain, collectively shut in 10.5 million barrels a day during the closure and have strong financial incentive to prevent any toll scheme from taking hold. Those nations depend on unimpeded exports, making them natural allies against Tehran's proposal rather than participants in it.
How Bad Was the Closure
The scale of the disruption was significant. The Energy Information Administration's May Short Term Energy Outlook described the Strait as effectively closed to shipping since military action began on February 28, cutting off a route that normally carries close to 20% of global oil supply. April Brent prices averaged 117 dollars a barrel that month, the highest monthly average since June 2022.
What USO's Chart Says About Renewed Risk
WTI's swing between roughly 55 and 115 dollars over the past year shows how quickly geopolitical shocks can reprice crude in either direction. USO's current oversold reading reflects that plunge, but it does not guarantee the decline is finished. Any fresh escalation around Hormuz, whether military or political, could reverse the recent slide just as abruptly as the reopening triggered it.
Can the Rally in Oil Stay Down
The question now is whether the current calm holds or whether Iran's toll proposal, and Gulf capitals' resistance to it, becomes the next flashpoint. With USO's RSI flashing oversold and crude prices still volatile by historical standards, traders watching the fund have reason to expect more swings before the situation fully settles.