WTI Holds Above $92 as Traders Weigh Middle East Risk

Key Moments:

Geopolitics Keeps Risk Premium in Focus

West Texas Intermediate (WTI), the benchmark US crude oil contract, began the week on firmer footing as traders continued to factor in geopolitical risk tied to the US-Iran confrontation. After opening with a modest upside gap on Monday, WTI struggled to extend gains decisively, with market participants favoring a wait-and-see stance ahead of fresh developments in the Middle East. Even so, prices have held a positive tone through the Asian session, trading slightly above the $92.00 level and showing an advance of more than 0.80% on the day.

Over the weekend, US President Donald Trump rejected an Iranian proposal to reopen the Strait of Hormuz within a week and restart nuclear negotiations in exchange for lifting the US naval blockade of Iranian ports. Trump further stated on Sunday that additional military strikes on Iran were possible before US midterm elections, encouraging traders to maintain a geopolitical risk premium in crude prices.

Market nerves were also heightened by ongoing hostilities in the region. The Houthis in Yemen and Iran continued attacks on Saudi Arabia, leaving supply routes in the area exposed and providing further support to oil prices.

Diplomatic Efforts and Fed Expectations Temper Upside

At the same time, prospects for renewed diplomacy between Washington and Tehran have worked against a more aggressive rally in WTI. Peace negotiators are pressing Iran to grant concessions on its nuclear program to revive ceasefire talks with the US. Furthermore, Trump indicated that US negotiators are likely to hold additional talks with Iran this week, boosting expectations for a potential diplomatic path to ending the Iran war that began in February.

On the macro side, a firm tone in the US Dollar (USD) is acting as another headwind for crude. The greenback remains underpinned by rising market expectations for a US Federal Reserve rate increase in October and elevated US bond yields, limiting the scope for further strength in WTI in the near term.

Supply Signals and Incoming Data Keep Traders Cautious

Preliminary figures from Kpler indicated that crude exports from key Middle East producers rebounded in September to 12.8 million barrels per day, the highest level since the Iran war began. This recovery in regional shipments is encouraging some caution among traders, who are looking for sustained follow-through buying to validate that the recent corrective decline from this month’s peak – the highest since May 20 – has fully played out.

In addition, some participants appear inclined to remain on the sidelines until the release of China’s official PMIs on Wednesday, seeking clearer indications on demand prospects before establishing new directional positions in the oil market.

Technical Landscape: Key Levels in Focus

From a technical perspective, WTI continues to show a constructive near-term setup while trading above the 100-day Simple Moving Average (SMA) at $84.96. The recovery is also underpinned by reclaimed Fibonacci retracement levels, with prices holding above the 50.0% retracement at $84.44 and the 38.2% retracement at $88.59. This configuration points to buying interest emerging on dips as the market consolidates just below higher retracement bands.

The next notable resistance is situated at the 23.6% Fibonacci retracement at $93.72. A sustained break above that level would bring the structural high region at $102.01 into view. On the downside, immediate support is seen at the 38.2% retracement at $88.59, followed by the 100-day SMA at $84.96 and the 50.0% retracement at $84.44. Together, these levels create a broad demand zone that could attract buyers if prices undergo a deeper pullback.