- WTI gains strong positive traction on Thursday amid a further escalation of conflicts in the Middle East.
- Suspected Iranian attacks on oil tankers in the Strait of Hormuz fuel supply worries and lend support.
- The record release of emergency oil reserves and sustained USD buying keep a lid on further upside.
West Texas Intermediate (WTI) Crude Oil prices trim a part of strong intraday gains to the $94.75-$94.80 region on Thursday, though the downside seems limited amid supply disruption fears. The commodity, however, retains positive bias for the third straight day and currently trades below the $93.00 mark, still up over 6% for the day.
As the US-Israeli war on Iran shows no signs of ending, reports of suspected Iranian attacks on oil tankers in the northern Persian Gulf near Iraq and Kuwait fuel concerns about supply disruptions from the key oil-producing region. Moreover, Iran has warned that no crude will pass through the Strait of Hormuz, a critical maritime chokepoint. This turns out to be a key factor that triggers a fresh leg up in Crude Oil prices.
Meanwhile, the International Energy Agency (IEA) announced that its 32 member countries unanimously agreed to make 400 million barrels of Oil from their emergency reserves available to the market. Moreover, the Trump administration plans to release 172 million barrels from the US emergency oil reserve as part of the coordinated effort to ease soaring crude and gasoline prices amid the ongoing Iran war.
This move is intended to limit supply shocks and hold back bulls from placing aggressive bets. Moreover, worries about the war-driven inflationary pressure remain supportive of a further rise in the US Treasury bond yields and assist the US Dollar (USD) to gain some follow-through positive traction for the third straight day. A firmer Greenback further contributes to capping the USD-denominated commodity.
Nevertheless, the aforementioned supportive fundamental backdrop seems tilted in favor of bullish traders and suggests that the path of least resistance for Crude Oil prices is to the upside. Hence, any corrective slide could be seen as a buying opportunity and is more likely to remain cushioned as the market focus remains glued to geopolitical developments.
