WTI advances above $92.00, highest since July as Hormuz tensions stoke supply concerns
- WTI prolongs its uptrend and continues to draw support from persistent geopolitical uncertainties.
- The US-Iran standoff over the Strait of Hormuz fuels supply concerns and lends additional support.
- The fundamental backdrop favors bulls and backs the case for a further near-term appreciation.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – attracts follow-through buying for the second straight day and climbs to its highest level since July 23 during the early part of the European session on Tuesday. Bulls now look to build on the momentum beyond the $92.00 mark amid the widening US-Iran confrontation.
In the latest development surrounding the Middle East crisis, US forces struck and disabled three Iranian oil tankers over the weekend. This comes in a retaliation for an Islamic Revolutionary Guard Corps (IRGC) ballistic missile attack targeting two US Navy warships in the region, which keeps the geopolitical risk premium in play and continues to support crude oil prices.
Oil risk premium underpinned as US-Iran tensions resurface
According to commodity strategists at TD Securities, the latest flare-up in geopolitical tensions is reinforcing the vulnerability of the current détente in energy markets. They stress that “renewed hostilities between the US and Iran continues to highlight the fragility of any non-concrete deal or short-term de-escalation,” underscoring how quickly sentiment around supply security can shift in the absence of a durable agreement.
Meanwhile, Iran threatened to retaliate against any new US attacks on its assets, warning that energy infrastructure across the Gulf was vulnerable. Moreover, Iran’s security chief, Mohsen Rezaei, said that Tehran is preparing to enforce a full blockade around the Strait of Hormuz in response to economic sanctions. Intensifying fears of a prolonged disruption to oil supplies.
This turns out to be another factor acting as a tailwind for the black liquid and validates the positive outlook, suggesting that any corrective pullback is more likely to be bought into and remain limited. On the top side, the July swing high, around the $93.25 region, could act as an immediate hurdle, which, if cleared, should pave the way for further upside in the near term.
WTI daily chart
Technical Analysis
The near-term bias is bullish as WTI holds above the 100-day Simple Moving Average (SMA) at roughly $85.24 and has reclaimed the 61.8% Fibonacci retracement at about $91.59. Moreover, momentum indicators stay constructive. In fact, the Relative Strength Index (14) is pressing into the mid-60s without yet signaling extreme overbought conditions. Meanwhile, the Moving Average Convergence Divergence (MACD) line remains above zero and its signal line, with a positive, slightly expanding histogram that hints at persistent upside pressure.
On the downside, initial support is now seen at the 50% retracement around $86.78 and the 100-day SMA at $85.24, which together form a broader demand zone if prices correct lower. On the topside, a sustained break higher would expose the 78.6% Fibo. retracement at approximately $98.44, with the prior swing high at $107.16 acting as a subsequent resistance barrier if the current bullish momentum extends.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
