Brent crude drops below $74 for the first time

Crude oil prices are sliding sharply, with the United States Oil Fund (AMEX:USO) dropping 3.89% on Saturday to $106.89, its lowest point in recent memory and barely above its 52-week floor of $105.65. The selloff reflects a convergence of supply relief: recovering tanker traffic through the Strait of Hormuz, rebounding Gulf exports, and growing expectations that Iranian crude could return to global markets in volume.

At a Glance

• USO fell 3.89% to $106.89, with an RSI of 27.65, deep in oversold territory
• Brent crude dropped below $74 per barrel, near levels last seen when the Iran conflict began in late February
• UAE oil exports have recovered to roughly 85% of pre-war levels, reaching about 4.3 million barrels per day
• President Trump has directed the Justice Department to investigate oil companies for price gouging at the pump
• Gold slipped below $4,000 per ounce for the first time since November 2025 as the dollar strengthened

Supply Relief Drives the Selloff

The proximate cause of the crude price decline is a recovery in Gulf energy flows that analysts had not expected to arrive this quickly. Before the conflict that erupted on February 28, the Strait of Hormuz handled roughly 125 to 140 vessel crossings per day, moving about 20 million barrels of oil and petroleum products, a volume equal to around a quarter of all global seaborne oil trade. That corridor seized up for months after fighting began.

Traffic is now recovering, though not fully. The International Energy Agency reported that UAE oil exports had climbed to approximately 4.3 million barrels per day in early June, up sharply from 1.9 million barrels per day in March. That figure represents about 85% of the country's pre-war export pace, and traders are treating it as a signal that the worst of the supply disruption has passed.

Brent crude peaked at around $118 per barrel during the conflict and has now fallen nearly 40% from that high. As of Wednesday afternoon, the international benchmark sat just below $74 per barrel. Benchmark US crude dropped to $70.36 per barrel by 3 pm CEST, still above the approximately $67 level it traded at before the war began.

Iranian Crude: The Wildcard Weighing on Prices

Beyond the physical recovery in tanker traffic, traders are increasingly pricing in a more significant shift: the potential return of Iranian crude exports to global markets. Progress in US-Iran peace talks, combined with a temporary sanctions waiver, has raised the probability that Iranian supply, which was sharply curtailed during hostilities, could come back in a meaningful way. Analysts say this expectation is driving the most recent leg down in prices, layered on top of the tanker traffic recovery.

Disagreements over nuclear inspections and the scope of sanctions relief remain unresolved, so the durability of any agreement is far from certain. But the direction of travel is clear enough that markets have already begun to reprice the risk premium that crude carried through much of the conflict period.

Trump, Gasoline Prices, and a DOJ Investigation

Falling crude benchmarks have not translated into equivalent relief at US gas stations, and that gap has drawn a sharp response from the White House. President Trump posted on social media Wednesday morning that gasoline prices are not falling as fast as oil prices, and he announced he had instructed the Justice Department to open an investigation into oil companies for price gouging. "Gasoline prices better start going down a lot faster than what I'm seeing!" he wrote.

According to AAA, the national average for regular unleaded gasoline stood at $3.93 per gallon as of Wednesday. Pump prices have declined over the past month, but the spread between crude's sharp descent and the more modest retail drop has clearly caught the administration's attention.

Gold Slips as the Dollar Strengthens

The crude selloff is not the only notable commodity move this week. Gold fell below $4,000 per ounce on Wednesday for the first time since November 2025. A stronger US dollar made the metal more expensive for buyers holding other currencies, while a hawkish tone from the Federal Reserve's most recent policy meeting pushed investors to raise their bets on further rate increases.

CME Group data shows that Wall Street now assigns an 85% probability to at least one Fed rate hike before year end, up from 60% just a week ago. The 10-year Treasury yield held at 4.48% early Wednesday. Investors are also watching Thursday's release of the Personal Consumption Expenditures price index, the Fed's preferred inflation gauge, for any additional signal on the rate path.

Frequently Asked Questions

Why is USO trading near its 52-week low?

USO tracks the price of light, sweet crude oil futures contracts. The fund has declined sharply as Brent and WTI benchmarks have retreated from their wartime peaks, driven by recovering supply from the Gulf region and expectations of increased Iranian exports.

What does an RSI of 27.65 on USO mean?

RSI, or Relative Strength Index, measures recent price momentum on a scale of 0 to 100. A reading below 30 is generally considered oversold, meaning the asset has fallen quickly enough that some traders watch for a potential stabilization or bounce, though oversold conditions can persist.

How does the Iran situation affect global oil supply?

Iran was a significant crude exporter before sanctions reduced its market access. A temporary sanctions waiver and advancing peace talks have raised the possibility that Iranian barrels could re-enter global supply chains, which would add downward pressure to prices if confirmed.

Will lower crude prices bring down gasoline costs?

Crude is the largest input cost in gasoline, so falling oil prices typically reduce pump prices over time. Refining margins, distribution costs, and taxes also factor in, which is why retail gasoline prices often lag crude moves by several weeks.

What to Watch Next

Thursday's PCE inflation print will be the next major catalyst for both bond yields and commodity sentiment. Any sign that inflation is reaccelerating could reinforce the Fed's hawkish stance and keep pressure on gold. For crude, the key variable is whether US-Iran negotiations produce a durable framework or stall on nuclear inspection terms, an outcome that would send the supply-relief trade into reverse.