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- WTI enters a consolidation phase following an Asian session uptick to a two-week high.
- Fresh US-Iran tensions and supply disruption worries lend support to the commodity.
- The OPEC+ decision to raise oil production and Saudi Arabia’s oil price cut cap gains.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – struggles to capitalize on the previous day’s strong move up and enters a bullish consolidation phase near a two-week high, touched during the Asian session this Wednesday. The black liquid currently trades just above the $72.00 mark, with bulls awaiting a sustained strength beyond a technically significant 200-day Simple Moving Average (SMA) amid renewed US-Iran hostilities.
In fact, the US military launched a new wave of strikes against Iran on Tuesday following reports of attacks on three oil tankers in the Strait of Hormuz, jeopardizing the already fragile ceasefire. Moreover, the Iranian Islamic Revolutionary Guards Corps (IRGC) said that it targeted 85 US military sites in Bahrain and Kuwait following the US ceasefire breach and added that it downed a US MQ9 drone in the country’s south. This raises the risk of a further escalation of conflict in the region, prompting traders to price in geopolitical risk premiums and acting as a tailwind for Crude Oil prices.
Meanwhile, the US also moved to withdraw a key concession that allowed Iran to sell oil in international markets. Furthermore, the US-Iran standoff fuels concerns about supply disruptions in the Strait of Hormuz, lending additional support to the black liquid. The upside for the commodity, however, remains capped on the back of the OPEC+ decision of another production target increase starting in August. Furthermore, Saudi Arabia slashed its August official selling price to Asia by an unprecedented $11 per barrel, which contributes to keeping a lid on gains for Crude Oil prices.
The market focus now shifts to the release of the June FOMC meeting Minutes, which will play a key role in driving the US Dollar (USD) demand and providing some impetus to the USD-denominated commodities. Apart from this, developments surrounding the Middle East crisis might continue to infuse volatility in Crude Oil prices.
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