West Texas Intermediate (WTI), the benchmark US crude oil price, is trading near $99.30-$99.35, up approximately 1.30% for the day, and remains close to its highest level since May 21, which was reached last Friday [1]. The surge in prices is attributed to escalating supply concerns in the Middle East, particularly following a widening conflict between Houthis and Saudi Arabia. Saudi Arabia was compelled to temporarily shut down the East-West oil pipeline after drone attacks originating from Iraqi territory near the Iranian border last Thursday [1]. Additionally, Iran-backed Houthi forces launched a large-scale attack on a Saudi air base in Khamis Mushait on Monday [1].
The situation is further complicated by the Houthis' recent seizure of Yemen’s Red Sea coast and the Bab al-Mandab Strait, as well as ongoing US-Iran tensions over the Strait of Hormuz. Iranian Supreme National Security Council Secretary Mohsen Rezaei has rejected immediate negotiations with the US, stating that Tehran will not return to talks until its conditions are met, dampening hopes for a diplomatic resolution and maintaining the geopolitical risk premium for crude oil [1].
From a technical perspective, WTI maintains a bullish bias, holding well above the 100-day Simple Moving Average (SMA) at $85.39 and reclaiming the 78.6% Fibonacci retracement at $98.57. The Relative Strength Index (14) is near 70, indicating strong but stretched upside momentum, while the MACD remains firmly positive, reinforcing persistent buying pressure [1]. Initial support is seen at $98.57, with further demand expected at $91.78 and $87.01, aligning with key Fibonacci retracement levels and the 100-day SMA [1].
Traders are awaiting the key FOMC decision on Wednesday, which is expected to influence the US Dollar and US Dollar-denominated commodities, including crude oil. Despite this, the fundamental backdrop suggests that the path of least resistance for WTI is to the upside, given the ongoing supply disruptions and geopolitical tensions [1].
CONCLUSION
WTI crude oil prices are experiencing strong gains due to heightened supply concerns and persistent geopolitical risks in the Middle East. Technical indicators and market fundamentals point to continued bullish momentum, with traders closely watching upcoming FOMC decisions for further direction. The current environment supports a positive outlook for crude oil in the near term.