Renewed US-Iran tensions lifted crude oil prices from crucial support

Geopolitical tensions have once again emerged as the primary driver of commodity markets. Crude oil prices opened with a significant gap higher, fueled by renewed US-Iran tensions that continue to embed a geopolitical risk premium into oil valuations. The situation escalated sharply after the US launched new airstrikes across Iran, prompting Iran to declare the closure of the Strait of Hormuz. Consequently, West Texas Intermediate (WTI) crude opened strongly above $75 before giving up some gains. Last week, WTI prices ended slightly higher, snapping a four-week losing streak amid ongoing concerns over shipping security through the Strait of Hormuz.

Strait of Hormuz Closure

Over the weekend, a fresh wave of US military attacks against Iran triggered retaliatory strikes on US military sites in the Middle East, heightening fears of potential disruptions to the global crude supply. These escalating geopolitical risks have intensified concerns over supply tightening, contributing to upward pressure on global crude prices. Recent reports confirm that Iran has fully closed the Strait of Hormuz, halting commercial shipping through this critical chokepoint. Approximately 20% of global oil and liquefied natural gas (LNG) trade transits the Strait, underscoring its strategic importance to global energy markets.

WTI crude Short-term Technical Forecast

The $75 level represents immediate resistance, marking the recent price spike high. A sustained break above this threshold would confirm a bullish breakout and potentially pave the way for further gains. On the downside, the $71 zone, which corresponds to the start of the price gap, now serves as key support; maintaining above this level would preserve the bullish technical structure. Analysis of the WTI daily chart also reveals a slight structural improvement, with momentum indicators showing signs of recovery. The MACD is nearing a bullish crossover above its signal line, and the RSI has rebounded from oversold conditions to approximately 45 today.

Bottom Line:

Overall, technical indicators suggest that US crude oil is in an upward correction phase, currently consolidating following the significant gap up. Key support is identified near $65.00, with immediate resistance around $76.30. Market participants remain cautious, closely monitoring ongoing US-Iran negotiations and geopolitical risks surrounding the Strait of Hormuz. Any extended disruption to shipping through this vital corridor could further tighten global supply and drive crude prices sharply higher.

 

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