Oil falls on de-escalation hopes. relief rally on Middle East de-escalation hopes – can it last?
Oil Falls on De-Escalation Hopes
Oil prices are falling more than 3%, slipping back below $100 per barrel in the first trading session of April, after posting a record monthly surge in March.
The pullback is being driven by growing optimism around potential de-escalation in the Middle East. President Trump suggested that US forces could begin withdrawing from the region within two to three weeks even if a deal with Tehran isn’t reached — even if the Strait of Hormuz remains partially closed.
This marks his clearest signal yet that the administration is seeking an end to the month-long conflict.
However, despite the near-term decline, prices are likely to remain structurally elevated. Even in a de-escalation scenario, supply constraints are unlikely to ease quickly.
Damage to energy infrastructure, disruptions to shipping routes, and elevated insurance and transport costs mean that oil flows may take time to normalise. In addition, the full extent of infrastructure damage will only become clear over time, suggesting that supply tightness could persist.
OPEC output fell by around 7.3 million barrels per day in March compared to the previous month, highlighting the significant impact of disrupted exports, storage constraints, and reduced production.
Looking ahead, oil markets will remain highly sensitive to geopolitical developments, with particular focus on President Trump’s expected address on the Iran conflict later today.
Oil Forecast – Technical Analysis
Oil extended its recovery from the 20 SMA, running into resistance at 106.85 before falling lower, breaking below the 100.00 psychological level.
Sellers will look to extend the selloff towards 95.00, the 38.6% Fib retracement of the 55.00 low and 120.00 high. Below here, the 20 SMA, which has guided prices higher, comes into focus at 93.60. A break below 88.00, the 50% Fib retracement, creates a more bearish chart pattern bringing 80.00 into play.
However, for now, the uptrend remains intact. Buyers will look to rise above 100, to bring 105.00 back into focus, the 23.6% Fib level.
DAX Relief Rally on Middle East De-Escalation Hopes. Can it Last?
The DAX, along with its European peers, is rising on Wednesday as improving sentiment around a potential de-escalation in the Middle East supports risk appetite.
Washington has signalled openness to both direct talks with Tehran and a gradual winding down of the conflict, while Iranian officials have also indicated a willingness to engage under certain conditions.
Falling oil prices are providing relief to energy-sensitive sectors. Travel and leisure stocks are outperforming, while heavyweight banks are also moving higher as risk sentiment improves.
That said, the broader backdrop remains fragile. European equities have been under significant pressure since the conflict began in March, reflecting the region’s heavy reliance on imported energy. Furthermore, conflicting statements have been coming from the White House regarding the potential end to the war.
For now, the markets believe that the end is in sight. However, for the current rebound to extend meaningfully, investors will need to see more concrete signs of de-escalation — particularly a reopening of the Strait of Hormuz, which remains critical for restoring confidence in global energy supply.
DAX Forecast – Technical Analysis
After falling from 25,400 at the end of February, the DAX found support at 21,860, the 2026 low before recovering higher. The price has risen above 23,000 and the falling trendline resistance.
Buyers will look to extend gains to test 23,400, the September and August lows. A rise above here brings 24,000 round number and the 200 SMA into focus.
Immediate support is seen at 23,000, the November low. Below here, 22,500 comes into focus ahead of 21,860. A break below here is needed to create a lower low.