FX.co ★ Crude | CL/Crude Oil

West Texas Intermediate (WTI) crude oil began the week under significant pressure, retreating from Friday’s six-month high of $66.82 to trade back into the $65.00 territory. This sharp reversal marks a retreat from the highest levels seen since August 2024, as the market navigates a complex intersection of trade-driven demand fears and geopolitical supply risks. While the "Trump Trade" initially provided a boost to risk assets, a fresh wave of protectionist policy is now casting a shadow over global fuel consumption forecasts. The Tariff "Plan B" and Demand Destruction: The primary bearish catalyst this week was the legal "ping-pong" regarding U.S. trade policy. The Legal Blow: On Friday, the U.S. Supreme Court struck down President Trump’s "reciprocal" tariff framework, ruling that he exceeded his authority under the International Emergency Economic Powers Act (IEEPA). The Quick Pivot: Rather than backing down, the administration invoked Section 122 of the Trade Act of 1974, immediately announcing a 15% global tariff surcharge. Market Impact: This "Plan B" has reignited fears of a broader global trade war, which historically leads to decelerating industrial activity. With the IEA already trimming its 2026 demand growth forecast to 850,000 barrels per day, investors are increasingly concerned that these new trade barriers will act as a "tax" on global growth, effectively capping oil’s upside. The Iran "Red Line" and War Premiums: In contrast to the bearish trade news, WTI is finding a structural floor in the escalating tensions between Washington and Tehran. The Geneva Deadline: Negotiators are scheduled to meet in Geneva this Thursday after Iran submitted a detailed nuclear proposal. However, the tone from the White House remains strikingly militant. Vice President JD Vance noted that "distance remains" between the two sides, and President Trump has explicitly set a 10-to-15 day deadline for a breakthrough. The Strait of Hormuz Risk: The U.S. has initiated its largest military buildup in the Middle East since 2003, deploying two carrier strike groups and forward-deploying F-35 squadrons. Market analysts at Capital.com estimate that a $5 to $13 "war premium" is currently embedded in the price, reflecting the dire risk of Iran retaliating by blockading the Strait of Hormuz, a choke point for 20% of global oil. Macro Headwinds: GDP and the Dollar: Finally, the broader macroeconomic environment is providing mixed signals. Slowdown Signals: The preliminary U.S. Q4 GDP report showed an annualized growth rate of just 1.4%, well below the 3% forecast. This slowdown, partially attributed to the recent 43-day government shutdown and early tariff impacts, is fundamentally bearish for domestic energy demand. The Dollar Cushion: However, this economic cooling has weighed on the U.S. Dollar Index (DXY), which eased to 97.7 following the Supreme Court ruling. Since oil is priced in dollars, a weaker greenback makes crude more affordable for international buyers, preventing a total collapse in prices despite the oversupply concerns looming in the distance.