Crude Oil Trading Alert: Middle East Situation Remains Uncertain, Oil Prices Fluctuate Significantly at High Levels, Market Divergence Widens Further

Huitong Finance APP News — Yesterday, global financial markets experienced intense volatility, primarily driven by policy signals from U.S. President Trump. After publicly stating a pause on strikes against Iran’s energy infrastructure and hinting that negotiations might make progress, market risk expectations quickly cooled down. Crude oil prices plummeted sharply within a very short period, with a single-day decline exceeding 13%. Meanwhile, risk aversion eased, U.S. Treasury yields dropped rapidly, with the 2-year Treasury yield falling about 22 basis points to 3.79%, marking one of the largest daily swings recently. The U.S. stock market also showed a clear risk appetite recovery, with the S&P 500 index rising about 2.2% intraday. However, during Tuesday’s Asian trading session, oil prices continued to rebound, and Nasdaq futures slightly retreated. Overall, the market remains in a sentiment release phase, and before a clear direction emerges, volatility could further increase.

It is worth noting that this rebound in risk assets was almost entirely based on “expectation changes,” not on improvements in fundamental fundamentals. Less than an hour later, Iran denied any ongoing negotiations, raising doubts about the authenticity of the event. Nevertheless, the overall market trend did not immediately reverse, reflecting that investors are more focused on the policy intent itself—that the U.S. government may prefer to avoid further conflict escalation, thereby reducing the impact on the global economy.

From a macro perspective, Middle East tensions have a decisive impact on global energy supply. The Strait of Hormuz accounts for about 20% of global oil shipping. Any disruption would quickly push energy prices higher and transmit to inflation systems. During previous conflict escalations, rising oil prices significantly increased global inflation expectations and prompted markets to reassess monetary policy paths in major economies, even betting on further rate hikes.

However, the sharp decline in oil prices this round shows that the market’s pricing of “risk premiums” is highly elastic. If there is a possibility of conflict easing, the risk premiums accumulated earlier will be quickly eliminated, causing sharp price reversals. But this adjustment does not mean a trend reversal; it is more likely a phase of emotional recovery. Over time, if there is no substantial diplomatic progress, oil prices could regain upward momentum.

From an asset correlation perspective, this round of market behavior exhibits typical “risk asset synchronized recovery”: the dollar index weakens, bond yields fall, and stock markets rebound. This structure indicates that the market has entered a short-term “inflation easing trade.” However, internal market disagreements remain evident. On one hand, investors hope for a quick resolution of conflicts to restore economic stability; on the other hand, ongoing military deployments and repeated communications undermine policy credibility, making it difficult for the market to establish medium- to long-term consistent expectations.

Emotionally, the market is transitioning from “extreme risk aversion” to “cautious optimism,” but this process is highly unstable. Some funds are beginning to question whether policy signals are merely aimed at short-term market stabilization rather than a genuine strategic shift. Historical experience shows that when market movements are driven by a single political signal, their sustainability is usually weak, and reversals often occur during subsequent information corrections.

Technically, the daily chart indicates that oil prices, after a rapid surge, have formed a temporary top, with increased volume and a long downward candle following the news shock, signaling a shift from strong to weak in the short-term trend. The key support level is around $85, and if broken, prices could further decline toward $80. Resistance is concentrated near $95, which currently acts as a significant barrier. Momentum indicators show that the RSI on the daily chart has quickly fallen from overbought territory, indicating a weakening bullish momentum.

On the 4-hour chart, oil prices display a typical “waterfall decline” pattern, with short-term moving averages crossing bearish, and prices trading below moving averages, indicating a dominant bearish trend. The recent rebound is mainly technical correction. Attention should be paid to the $95 resistance; if it cannot be effectively突破, the market may continue to oscillate weakly. Additionally, the MACD below the zero line is widening, further reinforcing short-term downside risks.

Summary:
Overall, this market rebound is more a reflection of emotional recovery rather than a trend reversal. The sharp drop in oil prices has alleviated short-term inflation pressures, but the uncertainty in Middle East tensions remains the core variable influencing the market. Future trends will heavily depend on whether there is substantive easing of geopolitical tensions. If conflicts persist or escalate, oil prices and inflation expectations could rise again, suppressing risk assets. Conversely, clear diplomatic progress could lead to a phased recovery. Given the current environment of conflicting information and high policy uncertainty, investors should remain cautious of short-term volatility and monitor asset correlations to identify structural opportunities.