Jordan Major
As global tensions simmer in the Middle East, the oil market continues to act like a deal is not just possible, but likely.
WTI Crude is trading at $73.01, up just 1.73% on the day, even as some of Iran’s largest oil and gas facilities lie damaged or inactive and U.S. President Donald Trump publicly warned, “everyone evacuate Tehran immediately.”
Despite headline-level escalation, the market reaction remains subdued. In fact, the modest uptick in crude suggests that traders, and likely large funds, are still pricing in a short-lived, politically managed conflict, rather than a full-blown energy crisis.
On Monday, Trump denied reports that he had offered a formal peace proposal to Iran. But oil hasn’t surged. It hasn’t even cracked $75. This is where the disconnect becomes interesting.
What does the market know?
Some analysts are openly asking the question: Why is oil falling, or barely moving, when key production infrastructure is offline?
Alister Berkeley, Managing Director at financial advisory firm Berkeley Advisory, believes the market is betting on diplomacy — or at least a fast political containment.
“If last-ditch talks break down, I’ve got oil at ~$88 (bull case), and if a deal gets done, then ~$64 (bear case). Base case: $73.50,” Berkeley said, calling it an “event-driven short-term view in the fog of war.”
AI oil price prediction
Meanwhile, Finbold asked AI to generate predictive price targets for WTI Crude by July 1, modeling three scenarios:
By July 1, 2025, AI modeling forecasts WTI crude to trade in three distinct ranges depending on how the Iran–Israel conflict unfolds. If tensions escalate further, with diplomacy failing and hostilities intensifying, oil could spike to $87–$90 per barrel, as markets begin to price in long-term supply disruptions and broader regional instability.
In contrast, if a peace agreement or meaningful de-escalation is reached, prices are likely to retreat to the $63–$65 range, with traders rapidly unwinding risk premiums. The base case, however, assumes no formal resolution but no major escalation either.
Under this “managed tension” scenario, WTI is expected to hover between $72 and $75, reflecting the current balance of risk, infrastructure damage, and muted speculative positioning.
The smart money appears to agree. Positioning across energy ETFs and options markets shows hedging activity consistent with containment, not open-ended war. Traders are not preparing for $100 oil.
Still, with U.S. diplomatic language shifting by the hour, and Iran’s strategic output capacity damaged, oil remains one headline away from a breakout. But for now, money is flowing like a deal gets done.
Featured image via Shutterstock
