Can WTI Oil Find Support After Plunging on US-Iran Compromise Proposal and De-escalation Hopes?

• US Oil reverses from a one-month high above $100 earlier on Tuesday, falling more than 2%.
• Hopes of easing tensions rise as a compromise proposal reportedly secures United States backing and preliminary acceptance from Iran.
• Interest on Iranian funds frozen in Qatar would be transferred under the proposal, which also envisages a possible international inspection of Iran's nuclear facilities.

Hopes of reduced tensions in the Middle East are weighing on West Texas Intermediate (WTI) US Oil on Tuesday, following reports of a fresh diplomatic proposal between the United States (US) and Iran. At the time of writing, Crude Oil is trading near $95.70, a sharp decline of 2.36% on the day, having reversed from a one-month high above $100 earlier in the session.

Washington has reportedly approved a compromise proposal that Tehran has accepted in principle, according to Israel's Channel 12 News. Pakistan's army chief presented the proposal to senior Iranian officials on Tuesday. Efforts to narrow the differences between the two countries reportedly involve Pakistan and Qatar as intermediaries.

Preventing further escalation and creating an opening for renewed negotiations between Washington and Tehran are the objectives of the diplomatic initiative. While the proposed agreement's exact terms are still unclear, hopes of a diplomatic breakthrough are reducing the geopolitical risk premium factored into Oil prices.

A partial concession to Iran's demands for access to funds frozen overseas is reportedly part of the proposal. Channel 12 News reports that Iran would receive the interest earned on approximately $6 billion of Iranian funds held in Qatari banks. Intended to support negotiations, this financial concession would not necessarily entail releasing the principal amount.

A confidential visit to Iranian nuclear facilities by the International Atomic Energy Agency (IAEA) has also reportedly been accepted by Tehran, according to a Qatari report cited by Channel 12 News. Such an inspection would take place without a public announcement and could address US concerns over Iran's nuclear programme.

Official confirmation of the reported arrangement is still pending, however, leaving the scope of each side's commitments unclear. Even with preliminary agreement, a final deal is not assured.

Can WTI US Oil retain its bullish technical bias?

Trading at $95.61 on the four-hour chart, WTI US Oil retains a constructive bullish bias above both the 100-period simple moving average (SMA) at $92.00 and the 200-period SMA at $93.15. Its position above nearby horizontal support at $95.00 points to underlying buying interest on declines. Meanwhile, a Relative Strength Index (14) reading of around 46 suggests that upward momentum is pausing rather than undergoing a complete reversal.

Should selling intensify, the $95.00 horizontal level offers immediate support, ahead of the 200-period SMA near $93.15 and then the 100-period SMA at $92.00. A sustained move above the next significant resistance, the previous horizontal ceiling at $101.05, would likely clear the way for a resumption of the broader bullish trend.

(The technical analysis of this story was written with the help of an AI tool. Know more.)