Yesterday, oil resumed its decline, updating lows after the worst quarter since 2020. The September contract for Brent fell below $71 per barrel, losing more than 3 percent over the previous two sessions, while WTI trades around $68. Two factors are putting pressure on prices. The influx of oil through the Strait of Hormuz continues to grow, and there has been progress in indirect negotiations between the U.S. and Iran.

The scale of the recovery in supply is impressive and undermines Tehran's main asset. According to reports, pumping through the strait has reached over 10 million barrels per day, clearly highlighting Iran's limited capacity to stop shipping.

Even after the exchange of blows over the past weekend, flows through the strait did not stop, and UAE exports have returned to pre-war levels thanks to alternative routes. This is a key shift. The market is convinced that Iran cannot physically close the strait, meaning the geopolitical premium continues to evaporate. Notably, key grades of American oil have fallen and are trading at a discount, reflecting weaker demand for U.S. oil.

However, it is still very early to completely dismiss geopolitics. The Islamic Revolutionary Guard Corps is unlikely to willingly relinquish its influence over the strait, as its only real leverage is the ability to blackmail the global economy. In other words, control over the strait for Tehran is not so much an economic tool as a political one, and they are in no hurry to part with it voluntarily.

Regarding the current technical picture of oil, buyers need to reclaim the nearest resistance at $71.25. This will allow them to target $76.30, above which it will be quite challenging to break through. The furthest target will be around $81.38. In the event of a decline in oil, bears will try to take control of $67.77. If successful, a breakout of that range will deal a serious blow to the bulls' positions and push Oil down to a low of $59.96, with the prospect of reaching $51.99.