Oil prices retreat on USD strength but geopolitical tensions in the Middle East cap further declines near $84.00.
West Texas Intermediate crude oil falls below $84.00 in early European trading, extending losses for a second consecutive session. The decline follows an intraday high near $85.35 as the USD recovers from recent lows, pressuring dollar-denominated commodities.
The USD’s rebound stems from persistent inflation concerns linked to volatile energy prices, keeping expectations of a Federal Reserve rate hike in 2026 alive. However, escalating US-Iran tensions, including threats to Gulf oil exports and warnings over the Strait of Hormuz, limit crude’s downside.
Market participants remain cautious as geopolitical risks offset the bearish impact of a firmer USD, with oil inventories in the US Strategic Petroleum Reserve also declining.