WTI holds above $80 as Middle East tensions keep geopolitical premium elevated
WTI remains firmly supported near the $80 level as traders continue to price in elevated geopolitical risks across the Middle East. The military confrontation between the United States and Iran remains the primary driver of sentiment, with markets closely monitoring potential disruptions to shipping through the Strait of Hormuz and renewed threats affecting energy infrastructure.
Although no major supply interruption has materialized, the geopolitical risk premium remains firmly embedded in crude prices.
OPEC+ output increase offsets part of the supply risk
The bullish impact of geopolitical developments continues to be balanced by higher expected supply. OPEC+ confirmed another production increase for August, adding roughly 188,000 barrels per day as part of its gradual rollback of voluntary production cuts. At the same time, the latest EIA report showed U.S. crude inventories falling by 1.7 million barrels to 409.7 million barrels, leaving stocks around 6% below the five-year seasonal average. Strong refinery utilization above 96% and resilient fuel demand continue to provide additional support for prices.
Macro backdrop remains supportive for commodities
Recent U.S. inflation data reinforced expectations that the Federal Reserve could move toward a less restrictive policy stance later this year. Lower inflation expectations have eased pressure on financial conditions and helped stabilize commodity markets. However, investors remain cautious as higher oil prices themselves could complicate the inflation outlook if tensions in the Gulf intensify further. Meanwhile, both the IEA and the EIA continue to expect additional supply growth later this year once Middle East production and exports gradually normalize, limiting the upside beyond the current geopolitical rally.
Technical outlook remains constructive above key support
The hourly chart shows WTI consolidating just above the $80 area after a powerful rebound from the July lows. Price continues to trade above the short, medium and long-term moving averages, confirming that buyers retain control of the near-term trend. Immediate resistance is located around $82, followed by the $84 region. Initial support is seen near $80, while a break below this level could expose the $78 area. As long as geopolitical tensions remain elevated, pullbacks are likely to attract renewed buying interest. Even so, volatility is expected to remain exceptionally high as headlines from the Middle East continue to dictate short-term price action, as I already warned in WTI steadies near highs as Middle East risks tighten market sentiment.
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