The move continues to be driven by the Strait of Hormuz. The passage is normally used to transport energy equivalent to 20% of the world’s oil and gas demand. As Iran curtails shipping and the U.S. continues to blockade Iranian ports, there is less supply flowing to international buyers from the Middle East. That’s why oil prices have been rising for several days.
It is also factoring in the reality of tanker movements. According to vessel-traffic data, six Iranian oil tankers had to turn back because of the U.S. blockade. On average, 125-140 ships used the Strait every day before the war on February 28. This traffic has now fallen. Even with an immediate ceasefire, it could take months for supply outages, port congestion and shipping bottlenecks to be resolved. This also maintains a risk premium in oil prices and supports upside in the short term.
WTI Technical Analysis: Price Rebounds Toward $120 Resistance
The daily chart of WTI oil shows that the price has remained in a strong range between $80 and $120 since the war began. However, the price action before the war was strongly constructive, as seen by the strong bullish price action development above the long-term support of $55.
The price broke above the downtrend line at the $70 region as the war started on 28 February. After the breakout, the price surged quickly to reach $120 but corrected lower to the 50-day SMA at $80.
