United States Oil Fund LP (NYSE:USO) shares are getting hit hard on Wednesday after President Donald Trump announced a conditional two‑week pause in U.S. strikes on Iran and signaled that Washington and Tehran had reached an early agreement on several elements of a broader peace framework.
- United States Oil Fund stock is feeling bearish pressure. Why is USO stock dropping?
Trump’s Late‑Night Announcement Sparks Oil Sell-Off
Traders who had spent weeks pricing in a prolonged shutdown of the Strait of Hormuz, which handles about one‑fifth of global seaborne oil, suddenly reversed course after Trump claimed Iran had agreed to reopen the waterway under a temporary ceasefire. With the geopolitical risk premium evaporating almost instantly, crude collapsed and USO followed.
The shift began Tuesday evening when Trump posted that he would suspend planned strikes on Iran for two weeks, contingent on Iran fully reopening the Strait of Hormuz. He said the decision followed conversations with Pakistani leadership and that many points in a proposed 15‑item peace plan were already agreed upon.
The conditional ceasefire, hinging on Iran allowing “complete, immediate, and safe” passage through the strait, signaled to traders that the supply shock driving crude higher could unwind faster than expected.
Trump later added that the U.S. would “work closely with Iran” and that Tehran could receive sanctions and tariff relief in exchange for halting uranium enrichment.
Iran’s Foreign Minister Seyed Abbas Araghchi confirmed Tehran’s acceptance of the framework, saying Iran would stop defensive operations if U.S. attacks ceased and that safe passage through the Strait of Hormuz would be coordinated with Iranian forces for the two‑week period.
USO Stock Remains Above Key Levels
USO is trading 1.2% above its 20-day simple moving average (SMA), the stock’s average price over the last 20 sessions, which suggests the short-term trend is still holding up despite today’s drop. It’s also trading 46% above its 100-day SMA, which indicates the intermediate trend remains strongly tilted upward.
The relative strength index (RSI), a momentum gauge, is 71.46 after entering overbought territory at the start of April, which suggests upside momentum has been strong but can be prone to sharp pullbacks. A golden cross in February also reinforced the longer-term uptrend.
USO is up 93.50% over the last 12 months. After breaking above resistance in March and tagging a recent swing high, the current move reads like a test of whether buyers still defend higher levels.
- Key Resistance: $124.00 — where rallies have recently stalled near the top of the range
- Key Support: $106.50 — an area buyers previously defended during pullbacks
USO Price Action: USO shares were down 11.91% at $121.61 at the time of publication on Wednesday, according to Benzinga Pro.
Image: Shutterstock
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