WTI began the week firmer, holding near $92.00 in Asian trading after snapping a two-day decline as renewed hostilities in the Gulf reduced prospects for ending a three-month conflict. Israel reported fresh strikes on military targets in western and central Iran after Iran launched waves of ballistic missiles at the Ramat David air base on Sunday night. Further reports of action in southern Lebanon and northern Iraq, alongside the effective closure of the Strait of Hormuz, added to supply-risk concerns and supported crude.
Technically, prices remain capped below the 200-period SMA on the four-hour chart, with that resistance flagged at $95.38. The MACD is still slightly negative, while the RSI sits near 56, pointing to only a modest positive bias unless the 200-SMA barrier is reclaimed. On the downside, support is seen at $86.50–$86.00, and a break lower could open the way towards sub-$81.00 levels, identified as the April monthly swing low. Separately, API and EIA weekly inventory reports are released on Tuesday and the following day, and their results fall within 1% of each other 75% of the time.
Geopolitical Tension Supports Crude at $92 Amid Supply-Risk Concerns
Given the recent price action, we see crude oil holding near $92.00, driven primarily by escalating conflict in the Middle East. The reported strikes between Israel and Iran are a significant catalyst, threatening a wider regional war. This geopolitical tension is the main reason for the market’s current strength, overriding some weaker technical signals.
The effective closure of the Strait of Hormuz is a critical supply risk we must monitor closely. Historically, any disruption to this chokepoint, through which over 20% of global oil flows, causes immediate price spikes. Recent EIA analysis suggests a full closure could remove over 17 million barrels per day from the market, creating a severe supply shock.
Technical Outlook, Inventories, And Broader Market Dynamics
From a trading perspective, the key level to watch is the 200-period moving average on the 4-hour chart, currently acting as resistance around $95.38. A decisive break and hold above this level would signal further upward momentum, opening the door for a move toward $100. Until then, we should remain cautious, as the slightly negative MACD indicator suggests underlying bearish pressure has not fully disappeared.
On the downside, we are watching the strong support zone between $86.50 and $86.00. Any signs of de-escalation in the Gulf could see prices test this area quickly. A break below this support would likely trigger further selling, making put options or other bearish strategies attractive.
Last week’s inventory data from the Energy Information Administration (EIA) showed a surprise draw of 2.1 million barrels, which lends support to the current price. We will be watching this week’s API and EIA reports very closely for confirmation of tightening US supplies. Another significant draw would reinforce the bullish case, especially with current geopolitical risks.
On the demand side, the global economic picture is mixed, with the IMF’s latest forecast projecting a modest 3.1% global growth for 2026. Recent customs data from China indicated slightly softer crude oil imports, a factor that could limit a runaway price rally. We believe this puts a soft cap on how high prices can go without a true supply catastrophe.
OPEC+ has added to the tight supply outlook by maintaining its current production quotas at its meeting last week, citing the need for market stability amidst the uncertainty. This decision removes a potential source of additional barrels from the market in the near term. We interpret this as the cartel being comfortable with prices in the $90-$100 range for now.
