Crude oil prices are sliding toward levels not seen since before the Iran conflict began, with the United States Oil Fund (AMEX:USO) dropping 3.91% on Saturday to 106.85, just above its 52-week low of 105.65. The move reflects a convergence of supply recovery signals and diplomatic progress that has stripped nearly 40% from wartime highs.
At a Glance
- USO fell 3.91% to 106.85, within cents of its 52-week floor of 105.65
- RSI of 27.62 places USO deep in oversold territory
- Brent crude slipped below $74 per barrel, nearing pre-war levels
- UAE oil exports rebounded to roughly 85% of pre-war volumes in early June
- Trump directed the DOJ to investigate oil companies for price gouging at the pump
| 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 |
Supply Recovery Is Doing the Heavy Lifting
The proximate driver of this week's selloff is a meaningful improvement in Gulf energy flows. The Strait of Hormuz, which handled 125 to 140 vessel crossings per day before the conflict broke out on February 28 and channeled roughly 20 million barrels of oil and petroleum products daily, had seen traffic collapse during months of wartime disruption. Crossings are now recovering, though analysts note volumes remain below pre-war norms.
The International Energy Agency put specific numbers on the UAE rebound: exports reached approximately 4.3 million barrels per day in early June, up sharply from 1.9 million barrels per day in March and representing about 85% of pre-conflict output. That kind of supply restoration, concentrated in a matter of weeks, is a direct bearish catalyst for the paper market.
Beyond tanker traffic, traders are pricing in the prospect of Iranian barrels returning more fully to the market. A temporary sanctions waiver and incremental progress in US-Iran peace negotiations have raised expectations that Iranian crude exports could increase, even as disagreements over nuclear inspections and formal sanctions relief remain unresolved. Analysts describe this forward-looking adjustment as contributing a second, distinct leg down in prices on top of the physical supply recovery already underway.
Where Prices Stand Against the War Timeline
The arithmetic of this selloff is striking. Brent peaked at around $118 per barrel during the wartime spike and has now shed close to 40% of that high, settling just below $74. For context, Brent traded at roughly $72.48 on the day before the conflict began, so while the discount to peak is enormous, the market has not yet fully erased the war premium. Benchmark US crude fell to $70.36 per barrel by mid-afternoon in European time; its pre-war level was approximately $67.
USO's 52-week range of 105.65 to 154.08 captures the full arc of that journey. The fund is now trading at the bottom of that band, and its RSI reading of 27.62 signals that selling pressure has reached an extreme. Oversold readings at this magnitude often precede at least a short-term stabilization, though the fundamental supply picture would need to deteriorate meaningfully to reverse the current trend.
Trump, Gasoline Prices and the DOJ
President Donald Trump injected a political dimension into the oil story on Wednesday, posting on social media that gasoline prices are not falling as fast as crude and directing the Justice Department to investigate oil companies for price gouging. According to AAA, the national average for gasoline stands at $3.93 per gallon. Pump prices have declined over the past month, though the lag relative to crude has drawn Trump's public frustration.
Whether the DOJ inquiry produces any formal action is an open question, but the announcement adds regulatory uncertainty to the downstream refining and retail sector at a moment when crude margins are already compressing.
The Dollar and Rate Expectations Weigh on Gold
The same macro backdrop pressuring oil is reshaping precious metals positioning. Gold dropped below $4,000 per ounce for the first time since November 2025 on Wednesday, with a strengthening dollar and a more hawkish Federal Reserve tone eroding demand. The Fed has signaled at least one additional rate increase before year-end, and CME Group data shows Wall Street assigning an 85% probability to a hike this year, up from 60% just a week earlier. The 10-year Treasury yield held at 4.48%, keeping real return competition for non-yielding assets like gold elevated. Thursday's PCE release will give traders the next concrete read on whether inflation justifies that rate path.
Frequently Asked Questions
Why is USO falling so sharply right now?
USO tracks crude oil prices, which have dropped nearly 40% from their wartime peak as Strait of Hormuz shipping recovers and traders price in the potential return of Iranian crude to global markets following a temporary sanctions waiver and ongoing peace talks.
Does an RSI below 30 mean oil will bounce?
An RSI reading below 30 indicates oversold conditions and can precede a short-term price stabilization or bounce, but it is a momentum signal rather than a directional forecast. Persistent supply additions or further diplomatic breakthroughs could keep prices under pressure despite the technical reading.
What is the Strait of Hormuz and why does it matter for oil prices?
The Strait of Hormuz is a narrow waterway between Oman and Iran through which roughly a quarter of globally traded seaborne oil passes. Disruptions to transit there directly reduce supply reaching world markets, lifting prices; recoveries in traffic have the opposite effect.
How does a stronger dollar affect oil and gold prices?
Both crude oil and gold are priced in US dollars globally. When the dollar strengthens, buyers using other currencies face higher effective costs, which tends to reduce demand and press prices lower.
What to Watch Into the Weekend
The critical near-term variables are the pace of Strait of Hormuz traffic normalization, any concrete developments in US-Iran nuclear inspection talks, and Thursday's PCE inflation print. A hotter-than-expected PCE reading would reinforce the Fed's hawkish posture and likely support the dollar, adding another headwind to commodities across the board. For USO specifically, the 52-week low at 105.65 is now the line that traders will watch most closely.
