Crude Oil Advances as US Warns of Possible Retaliatory Strikes

Summary:

WTI rises toward $92 as renewed Houthi attacks and shipping threats revive Middle East supply concerns. However, weaker OPEC demand forecasts, potential Russian energy deliveries and US reserve releases could limit further gains.

Buy WTI

End Time

CLOSED

93.004

ENTRY

100.500

TGT

85.000

98.880 +0.267 +0.27%

1465

Points

Profit

85.000

94.469

CLOSING

93.004

ENTRY

100.500

TGT

West Texas Intermediate (WTI) crude oil advanced approximately 1% on Monday, trading near $91.90 as renewed instability across the Middle East strengthened concerns about potential disruptions to global energy supplies. However, expectations of improving Russian energy exports and a weaker demand outlook are preventing a more aggressive rally.

Oil prices found fresh support following another escalation in hostilities involving Iran-backed Houthi forces and Saudi Arabia. Reports of two attacks targeting King Khalid International Airport over the weekend, with the initial strike reportedly leaving 12 people dead and more than 300 injured, have heightened fears that the conflict could spread to critical regional infrastructure.

US President Donald Trump warned that Washington could participate in retaliatory military operations alongside Saudi Arabia, while also directing fresh warnings toward Iran. The possibility of broader military involvement has increased uncertainty surrounding energy production facilities and maritime transportation routes.

Concerns over shipping security intensified after a drone struck an oil tanker near Oman's Sohar anchorage, close to the Strait of Hormuz. The incident, classified as an attack by UK Maritime Trade Operations, reinforced fears about the vulnerability of one of the world's most important energy corridors.

Despite these developments, several factors are limiting oil's upward momentum.

Washington has indicated that Russia and Ukraine could move toward an agreement to suspend attacks on energy infrastructure. Although Ukrainian President Volodymyr Zelenskyy initially questioned whether a formal arrangement existed, he subsequently expressed willingness to support ceasefire guarantees, provided Washington could help ensure Russian compliance.

Additional supply relief could emerge from a proposed agreement involving Russian diesel deliveries to the United States. The arrangement would reportedly begin with more than 300,000 tons, followed by further shipments over the coming months.

Meanwhile, the demand outlook has deteriorated considerably. OPEC has reduced its projection for global oil consumption growth this year to just 400,000 barrels per day, compared with an earlier estimate of 1.4 million barrels per day. The substantial downward revision highlights concerns about the strength of global energy demand, although the organization expects some delayed consumption to recover in 2027.

The US Department of Energy has also authorized an emergency exchange of up to 4 million barrels from strategic petroleum reserves to address supply disruptions associated with Hurricane Isaias.

The combination of weaker demand expectations and potential additional supplies is creating resistance to a sustained advance in crude prices. Nevertheless, geopolitical developments remain the dominant near-term influence, particularly as threats to Gulf shipping and Saudi infrastructure continue.

The immediate outlook for WTI remains cautiously bullish, with geopolitical risk premiums supporting prices around $92. However, a more sustained advance will likely depend on whether regional tensions translate into meaningful disruptions to physical crude supplies.

Investors will next turn their attention to Tuesday's American Petroleum Institute inventory report for further insight into US supply conditions.

Technical Analysis

WTI crude oil is showing signs of a strengthening bullish recovery as buyers challenge an important resistance barrier following several weeks of volatile trading. On the four-hour chart, prices have rebounded from the $86.50–$87.50 support region, establishing a series of higher lows that suggest selling pressure is gradually fading. The recovery has brought crude back toward $92.15, placing the market at a critical technical level where a breakout could determine the direction of the next significant move.

The recent price structure resembles a developing inverse head-and-shoulders formation, with the neckline positioned around $92.50–$93.00. Multiple attempts to break this resistance have previously encountered selling pressure, making the area particularly important for confirming a bullish reversal. A decisive four-hour close above this zone, followed by a successful retest, would strengthen the case for additional upside momentum.

If buyers establish control above $93.00, the next potential resistance emerges around $95.00, followed by the $97.50 region. Beyond these intermediate barriers, attention would shift toward the major $100.00–$100.75 supply zone, where previous rallies stalled. The projected price trajectory on the chart favors an initial breakout, a brief corrective pullback toward the former neckline, and a stronger advance toward this upper resistance.

On the downside, immediate support is concentrated around $90.00–$90.50, while the $86.50–$87.50 demand zone remains the foundation of the developing recovery. A sustained break beneath this lower region would invalidate the bullish reversal structure and expose the market to renewed downside pressure toward $84.50.

Although the broader price action remains influenced by the sharp correction from September's highs, the latest recovery suggests that buyers are attempting to establish a more sustainable upward structure. A confirmed breakout above $93.00 would provide the clearest indication that bullish momentum is gaining traction, potentially opening the way for a retest of the psychologically important $100 level.

TRADE RECOMMENDATION

BUY WTI

ENTRY PRICE: $93.00

STOP LOSS: $85.00

TAKE PROFIT: $100.50

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Warren Takunda

Analysts

Warren Takunda, a seasoned finance leader specializing in the Middle East, is a trusted senior analyst with a proven track record. As head of the finance team, he excels in financial planning, analysis, and reporting. Warren's expertise in financial modeling and investment analysis delivers valuable insights to clients.

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