WTI Extends Rally as Hormuz Tensions Drive Oil Higher

Key Moments

WTI Climbs on Geopolitical Risk and Follow-Through Buying

West Texas Intermediate (WTI), the benchmark US crude oil contract, continued its upward momentum on Tuesday, extending the prior session’s sharp gains. Prices strengthened for a second consecutive day, with the contract pushing to a near one-month peak around the $80.00 per barrel level during the Asian session. The move was underpinned by renewed concerns about supply security as tensions between the United States and Iran intensified.

The advance attracted additional buyers following Monday’s rally, as market participants reacted to the heightened risk of disruption in key shipping lanes. The combination of follow-through technical buying and mounting geopolitical risk underpinned the latest leg of the recovery from the recent trough, which had marked the lowest level since late February.

US-Iran Escalation and Strait of Hormuz Supply Concerns

The geopolitical backdrop turned more tense after the US military carried out a third consecutive night of strikes against Iran. This followed President Donald Trump’s reimposition of a naval blockade on Iranian ports on Monday. In retaliation, Iran’s Islamic Revolutionary Guard Corps (IRGC) targeted US facilities in the region.

The situation escalated further when two UAE tankers came under attack from Iranian cruise missiles in the Strait of Hormuz, a critical chokepoint for global oil shipments. These developments prompted traders to rapidly incorporate a higher geopolitical risk premium into crude prices, reinforcing the support under WTI and strengthening expectations that the recent rebound could extend.

Technical Picture: Bullish Signals Strengthen

From a chart perspective, Monday’s decisive move higher pushed WTI through two widely watched technical levels: the 23.6% Fibonacci retracement of the April-July decline and the 200-day Exponential Moving Average (EMA). This break was viewed as a key catalyst for bullish positioning, signaling a potential shift in market tone.

Momentum indicators also aligned with the constructive setup. The Moving Average Convergence Divergence (MACD) indicator turned convincingly positive, with its line crossing above the zero mark. At the same time, the Relative Strength Index (RSI) stood at 55.10, pointing to firm but not overstretched upside momentum, suggesting that buyers retained control while still leaving scope for additional gains.

Key Levels: Resistance, Support, and Potential Pullbacks

On the upside, several Fibonacci retracement levels of the April-July downswing stand out as potential resistance zones where supply could intensify. Immediate resistance is located at the 38.2% retracement at $82.20 per barrel. Above that, the 50% retracement at $86.88 and the 61.8% level at $91.55 are seen as subsequent hurdles that could challenge further advances.

Market participants may, however, exercise caution before initiating fresh long positions, with some likely to await upcoming US consumer inflation data and testimony from US Federal Reserve (Fed) Chair Kevin Warsh.

On the downside, the first notable support is aligned with the 200-day EMA at $77.24, followed by the 23.6% Fibonacci retracement at $76.41. Technicians expect that any corrective pullback toward these zones is likely to draw renewed buying interest. A more pronounced decline would bring focus onto a deeper support area near $67.06, viewed as a structural floor for the broader trend.