USOIL Surges 5–7% as Renewed US-Iran Tensions and Strait of Hormuz Uncertainty Reignite Supply Fears

USOIL (WTI crude oil futures) went on a steep climb today, jumping anywhere from 5 to 7% in early trading and didn’t lose steam even after the morning session had wrapped up. The strong bounce comes just a day after a major sell-off, with the market spooked by yet another flare up in the US-Iran standoff.

Key Factors Behind The Uptick

Iran decided on a change of heart, reversing their earlier declaration that the Strait of Hormuz was now open for commercial ships to pass through – and it looks like they’re now saying the opposite after the US indicated they weren’t about to lift the naval blockade of Iranian ports. There’ve been reports popping up all over the place – Iranian Revolutionary Guard troops firing on a tanker and a container ship getting hit by some sort of projectile, plus we’ve got the US Navy hauling in an Iranian cargo ship in the Gulf of Oman – and that’s the first time they’ve done that since the blockade went into effect.

President Trump is now saying it’s extremely unlikely that the ceasefire (which is due to run out sometime around the 22nd of April) is going to get extended, which has really ratcheted up the uncertainty. As long as the Strait of Hormuz (which handles roughly one-fifth of the worlds oil shipped by sea) remains in limbo, worries about massive oil supply disruptions are going to fuel a premium in the price.

Domestic supply in the US is still pretty robust, with some decent inventory builds in recent times helping ease the pressure a bit – but in the end it’s the headlines driving the market at the moment.

WTI Crude Oil Technical Insights

WTI crude on the 4-hour chart is trading just above $86 after breaking below that key $91.30 support zone, the one that’s held up multiple times and happens to be in line with the 200-period moving average. That break has confirmed that we’ve switched from a consolidation phase to a bearish trend – and one that’s being reinforced by the downward-sloping trendline from the $110 high.

The most recent set of candles showed a pretty sharp drop all the way down to $81.67, followed by a few small-bodied candles that were telling us to expect a bit more of a pause rather than a full-fledged reversal. That 50-period moving average near $92.17 is now serving as resistance, capping any attempts for a recovery.

Right now the price is making a bit of a bounce but remains below both of the moving averages and that earlier support zone which has probably turned into resistance now. If we don’t see a reclaim of $91, it could be looking at another leg down toward $81.67 and potentially even on toward $76.78.

This is telling us the momentum is really weak, with the RSI just hovering around 43.

Key Levels:

• Resistance: $90 to $95.30
• Support: $86 to $81.70 to $76.78

Trade Idea: Sell if we drop below $90.50 with the target at $81.70 and a stop loss above $95.30.