USOIL Price Forecast: Will the $89 Resistance Shatter as the Strait of Hormuz Crisis Deepens?
The global energy market is facing its most turbulent period since 2022 as the US-Israel-Iran conflict reaches a critical point...
Quick overview
- The global energy market is experiencing significant volatility due to the escalating US-Israel-Iran conflict, with WTI crude prices rising 35% since the beginning of the year.
- Geopolitical tensions have led to a blockade in the Strait of Hormuz, trapping 16 million barrels of oil per day and causing major disruptions in shipping and increased freight costs.
- Iran's strategic control over the Strait of Hormuz and its recent attacks on oil facilities in the Gulf have heightened concerns about global energy security and contributed to rising oil prices.
- Technical analysis indicates that WTI crude could reach $100 if current trends continue, but peace efforts could lead to a price drop back to lower support levels.
The global energy market is facing its most turbulent period since 2022 as the US-Israel-Iran conflict reaches a critical point. West Texas Intermediate (WTI) crude traded between $88.50 and $89.30 per barrel, up 35% since the start of the year. This sharp rise is mostly due to geopolitical risks, not typical supply and demand factors.
Analysts estimate that without the current war in the Middle East, USOIL would likely be trading in the low $60s due to a projected global surplus. However, with the regional escalation threatening the world’s most critical maritime chokepoints, the $100 psychological barrier is now back in sight.
The main reason for the recent price jump is that most shipping through the Strait of Hormuz has stopped. After US and Israeli forces struck Iranian military and nuclear sites on February 28, the Islamic Revolutionary Guard Corps (IRGC) declared the waterway closed.
By March 5, commercial shipping had ground to a standstill as war-risk insurance coverage was pulled for the region. With approximately 20% of the world’s crude oil and liquefied natural gas (LNG) transiting this narrow passage, the blockade has effectively trapped 16 million barrels of oil per day in the Persian Gulf. This logistical paralysis has forced a massive rerouting of tankers around the Cape of Good Hope, significantly increasing freight costs and delivery times.
Iran’s Strategic Chokepoint: Why Tehran Holds the Keys to $100 Oil
Iran’s role in the energy market is bigger than its production of about 3.1 million barrels per day. As OPEC’s fourth-largest producer, its control of the Strait of Hormuz gives it major influence over global energy security.
During the conflict, Iran has targeted oil facilities in Saudi Arabia, Qatar, and the UAE, causing force majeure declarations and production stops across the Gulf. For example, Kuwait recently had to cut output because it ran out of storage for oil that can’t be shipped through the strait.
- Supply Disruptions: Over 150 fully loaded tankers are now waiting outside the strait for safe passage, but military advisors say safety cannot be guaranteed.
- The War Premium: Speculators have added about $12 per barrel to current prices, reflecting worries that a long conflict could damage regional refining capacity.
- OPEC Response: Eight OPEC+ members have agreed to gradually increase production by 206,000 barrels per day starting in April. However, analysts warn that this extra supply won’t reach the market if the main shipping lanes stay blocked.
WTI Crude Oil Technical Analysis: The “God Candle” and the Path to $100
From a technical standpoint, USOIL has broken out of a multi-year downward trend that kept prices low since mid-2022. The recent sharp rise on the weekly chart points to a shift from a bearish phase to a strong bullish trend.
WTI has jumped above its 50-week and 200-week moving averages, which now act as key support if prices pull back. The Relative Strength Index (RSI) is above 80, showing extreme overbought conditions and signs of panic buying, which often leads to a short-term pause.
The next technical target is $91.41, matching the 1.618 Fibonacci extension. If prices close above this level for a full day, it could open the way to $100.02, which would likely cause more inflation in the US economy.
On the other hand, if peace efforts succeed, prices could fall back to the $83.61 support level. For now, the market is on high alert, and any new attacks on Gulf energy sites could push prices sharply higher, ignoring technical barriers.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
- Read our latest reviews on: Avatrade, Exness, HFM and XM
Save