Oil Surges Above $70 as US-Iran Conflict Erupts; Strait of Hormuz in Crosshairs

Summary:

WTI Crude has skyrocketed to its highest level since June 2025, breaching the $70.70 handle in Asian trading as geopolitical risk in the Middle East shifts from simmering tension to active warfare.

Buy XTIUSD

EXP

Trading

71.307

ENTRY

80.000

TGT

67.000

-- -- --

Point

Flat

67.000

CLOSING

71.307

ENTRY

80.000

TGT

The oil market woke up to a new geopolitical reality on Monday. West Texas Intermediate (WTI) is trading with a decidedly bullish bias near $70.65, marking a multi-month peak not seen since June of last year. This isn't merely a knee-jerk reaction to headlines; this is the market pricing in the potential for a catastrophic supply shock following a seismic escalation between the West and Iran.

Over the weekend, the unthinkable happened. The United States and Israel launched what they are calling "major combat operations" inside Iran. The situation deteriorated rapidly when Iran retaliated, firing a salvo of drones and missiles not just at Israeli territory, but crucially, at American assets and key U.S. allies across the region, including the United Arab Emirates, Bahrain, Qatar, Kuwait, and Jordan.

If that wasn't enough to rattle the cages of commodity traders, reports from CNBC over the weekend regarding the fate of Iranian Supreme Leader Ayatollah Ali Khamenei have added a layer of unprecedented uncertainty. While the mechanisms of state in Tehran appear to be holding for now, the vacuum at the top introduces a wildcard that makes the conflict even more unpredictable. Meanwhile, a stern statement from the White House confirmed that President Donald Trump has vowed to "avenge" the deaths of three U.S. service members, signaling that the bombing campaign is far from over.

From my vantage point, the immediate price action is less about the strikes themselves and entirely about the bottleneck. The Strait of Hormuz. We are looking at a scenario where traders are now actively pricing in a high probability of closure or severe disruption to this strategic waterway. We aren't just talking about Iranian exports here; roughly 20% of the world's total liquid petroleum supply passes through this narrow chokepoint.

If Iran makes good on decades of threats to block the strait, or if the conflict widens to target tanker traffic, we aren't looking at a $70 oil market. We are looking at a parabolic spike that breaks recent ranges to the upside. The fact that Iranian retaliation has already struck near key shipping channels in the Gulf is a red flag that the market cannot ignore.

In a bizarre twist of timing, OPEC+ convened over the weekend and announced they would be pulling the trigger on a production increase. The group agreed to boost output by 206,000 barrels per day (bpd). While that figure is relatively modest in absolute terms, it actually exceeded analyst expectations, suggesting the cartel felt pressure to cool a boiling market.

However, let’s be clear: 200,000 bpd is a drop in the bucket compared to the potential loss of Iranian barrels or a Hormuz closure. This feels like a symbolic move—an attempt to signal they have the market under control. But in reality, OPEC+ spare capacity is finite and concentrated in a few hands. If this conflict spirals, no spreadsheet output hike will compensate for the physical logistics nightmare of a Gulf in flames.

Technical Analysis

WTI crude oil appears to be transitioning out of a prolonged bearish phase and into a potential trend-reversal structure. On the daily chart, price action has been confined within a well-defined descending channel for an extended period, reflecting sustained selling pressure and a sequence of lower highs and lower lows. However, recent price behavior suggests that bearish momentum is beginning to fade, with buyers increasingly challenging the upper boundary of this channel.

WTI is now pressing against descending trendline resistance near the $71.50–$72.00 zone, an area that has repeatedly capped upside attempts in recent months. This region also aligns closely with horizontal resistance, reinforcing its technical significance. While price has not yet delivered a clean breakout, the strong bullish daily candle suggests rising upside conviction. A decisive daily close above this trendline would mark a structural shift and confirm a breakout from the broader downtrend.

On the downside, former support around $68.00 has now turned into a key near-term demand zone. This level has repeatedly absorbed selling pressure and remains critical for maintaining the emerging bullish bias. A sustained move back below $68.00, particularly if followed by a break beneath $65.00, would invalidate the breakout attempt and re-open downside risk toward the lower boundary of the channel near the $58.00–$60.00 area.

Momentum dynamics support the case for a basing and potential reversal rather than trend continuation. The Relative Strength Index (RSI) has rebounded from oversold territory and is now stabilizing around neutral levels, signaling improving momentum without signs of overheating. This recovery reduces the probability of an immediate bearish continuation and supports the view that the market is transitioning into a new phase. Meanwhile, the MACD is showing early signs of bullish convergence, with downside momentum clearly waning—often a precursor to trend reversals on higher timeframes.

If bulls can secure a confirmed breakout above $72.00, attention would shift toward the $80.00 psychological level as the next major upside objective, with intermediate resistance near $76.00–$78.00. Such a move would represent a meaningful change in long-term structure, potentially signaling the end of the broader corrective cycle.

TRADE RECOMMENDATION

BUY WTI CRUDE OIL

ENTRY PRICE: 71.50

STOP LOSS: 67.00

TAKE PROFIT: 80.00

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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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2193

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64.20%

P/L Ratio

0.70

Focus on

XAUUSD, EURUSD, GBPUSD

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Oil Surges Above $70 as US-Iran Conflict Erupts; Strait of Hormuz in Crosshairs

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