Crude oil prices are sliding toward levels last seen before the Iran war began, and the United States Oil Fund (AMEX:USO) dropped 3.91% on Saturday to close at 106.85, its lowest print in months and just a whisker above its 52-week floor of 105.65. The question now is whether the selloff reflects a genuine, lasting supply recovery or a market getting ahead of a peace deal that still has serious holes in it.
At a Glance
- USO fell 3.91% to 106.85, near its 52-week low of 105.65; RSI sits at 27.62, deeply oversold territory
- Brent crude dropped below $74 a barrel, down nearly 40% from its wartime peak of around $118
- UAE oil exports have recovered to roughly 85% of pre-war levels, at about 4.3 million barrels per day
- President Trump ordered a Justice Department probe into oil company price gouging at the pump
- Gold fell below $4,000 per ounce for the first time since November 2025 as the dollar strengthened
| Price | 106.85 USD |
|---|---|
| Day change | -4.35 (-3.91%) |
| 52-week range | 105.65 – 154.08 |
| RSI (14) | 27.62 |
| Volume | 4,210,094 |
A Peace Deal With Plenty of Fine Print
The immediate catalyst for crude's slide is a combination of recovering tanker traffic through the Strait of Hormuz and growing market conviction that Iranian crude could return to global supply in meaningful volumes. Before the conflict, the Strait processed roughly 125 to 140 vessel crossings per day, moving around 20 million barrels of oil and petroleum products, about a quarter of all seaborne oil trade. That corridor was badly disrupted. It is now partially open again, though analysts note traffic remains below prewar norms.
The International Energy Agency reported that UAE oil exports had rebounded to nearly 85% of prewar levels in early June, reaching approximately 4.3 million barrels per day. That is a significant recovery from just 1.9 million barrels per day in March, and it explains a substantial portion of the recent price decline.
What is pushing prices lower beyond the physical recovery is trader speculation around Iran. A temporary sanctions waiver and progress in US-Iran peace talks have led traders to price in the possibility of Iranian barrels returning more fully to the market. That is a significant assumption. Disagreements over nuclear inspections and the terms of sanctions relief remain unresolved, and betting on a smooth, durable agreement in that region carries real risk. The market may be discounting geopolitical friction that has a habit of snapping back.
Where Prices Actually Stand
Brent crude fell below $74 a barrel this week, a price not seen since the war began on February 28. For context, Brent peaked near $118 a barrel at the height of the conflict and was trading around $72.48 on the day before fighting started. So the market has essentially given back almost all of the war premium, but not quite. Benchmark US crude fell to $70.36 a barrel by mid-afternoon in European trading; before the war it was around $67.
USO's RSI of 27.62 signals that the fund is deeply oversold by conventional technical measures. That does not mean prices will bounce immediately, and in a market driven by macro fundamentals and geopolitics, oversold indicators can stay oversold. But it does suggest the selling has been aggressive, and any setback in the peace process could spark a sharp reversal.
Trump, the DOJ, and the Pump Price Gap
Early Wednesday, President Trump announced on social media that he had instructed the Justice Department to investigate oil companies for price gouging, arguing that gasoline prices at the pump are not falling as fast as crude. The average US gallon of gasoline was $3.93 according to AAA, down over the past month but apparently not fast enough for the White House.
Trump's price gouging framing deserves some scrutiny. The spread between crude costs and retail gasoline prices reflects refining margins, distribution, taxes, and retail markup, not just crude benchmarks. Investigations of this kind have been launched before with limited findings of actual illegal conduct. Whether this probe produces results or primarily serves as political pressure on energy companies is a fair question to ask.
Gold Drops, Dollar Firms
Gold falling below $4,000 per ounce for the first time since November 2025 adds another layer to the story. GLD tracks gold closely, and the move reflects two converging forces: a stronger US dollar and rising rate expectations. The Federal Reserve has signaled at least one more rate increase before year end, and market pricing via CME Group data showed an 85% probability of a hike, up sharply from 60% just a week earlier. Higher rates lift the dollar and raise the opportunity cost of holding gold, which pays no yield.
Investors are also watching Thursday's release of the Personal Consumption Expenditures price index, the Fed's preferred inflation gauge. The 10-year Treasury yield was holding at 4.48%, reflecting ongoing concern about inflation pressures, particularly from energy costs that are now falling. European markets were mixed, with Germany's DAX off 1.1% and France's CAC 40 up 0.4%.
Frequently Asked Questions
Why is USO near its 52-week low if oil prices are still above prewar levels?
USO tracks crude oil futures, and futures prices have shed nearly 40% from their wartime peak. The fund's 52-week range runs from 105.65 to 154.08, reflecting that peak-to-trough move. The current print of 106.85 sits just above the floor, consistent with Brent trading close to but still slightly above its prewar price.
What does an RSI of 27.62 mean for USO?
RSI below 30 is generally interpreted as oversold, meaning the selling pressure has been unusually intense relative to recent trading history. It is a technical signal that a reversal is possible, but it is not a guarantee, particularly when fundamental drivers like supply increases are actively weighing on the market.
Could Iranian crude returning to market push prices even lower?
Analysts say the prospect of fuller Iranian crude exports is already being priced in to some extent. Whether prices fall further depends on whether a durable agreement materializes, how quickly Iranian production actually scales up, and how OPEC members respond to any additional supply entering the market.
Why would a stronger dollar push gold below $4,000?
Gold is priced in US dollars globally, so when the dollar strengthens, buyers using other currencies effectively pay more for the same amount of gold, reducing demand. Rising rate expectations compound this by making yield-bearing assets more attractive relative to gold, which generates no income.
The Selloff Looks Legitimate, but Watch the Caveats
The supply side case for lower oil prices is real: Hormuz traffic is recovering, UAE exports are nearly back to normal, and Iranian barrels may follow. But the peace deal is incomplete, nuclear inspection disputes are unresolved, and markets have a history of pricing in Middle East optimism prematurely. USO at 106.85 and an RSI of 27.62 suggests the risk is increasingly tilted toward a bounce rather than a continued freefall, especially if talks hit a snag.