Iran ceasefire + Saudi price war revives — short oil majors as crude unwinds its
Thesis
The immediate fear premium from the Iran strike is fading as Hormuz reopens, and Saudi Arabia's decision to slash oil prices confirms supply is flowing freely again (cited in 'Saudi Arabia Set to Slash Oil Prices'). That drop in oil is being amplified by political pressure on the Fed: Trump is publicly pushing Chairman Warsh to cut interest rates even though inflation is above 4% (cited in 'Trump eases pressure on Fed Chairman'). If the Fed signals cuts, the dollar weakens — but that is already being priced into the oil complex as traders position for both lower geopolitical risk and a more dovish central bank. An oversold bounce play on beaten-down oil refiners or a short on energy majors (XLE) captures this double headwind.
Strategy approach
Build a mean-reversion strategy that enters long USO (or short XLE) on the D1 timeframe when WTI crude oil (CL=F) closes more than 2% below its 10-day average and the 3-day RSI is below 40. Add a filter: only enter if the DXY (US Dollar Index) is trending down (below its 20-day average). Exit when price reclaims the 10-day moving average or after a 14-day hold, whichever comes first. Use a 4% stop loss.