WTI targets $97 as Middle East tensions support oil prices

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Geopolitical risks keep oil prices elevated

Strait of Hormuz disruptions raise supply concerns

⠀The main supportive factor remains the situation in the Middle East, where a new wave of attacks on commercial vessels has significantly complicated oil transportation through the Strait of Hormuz. Over the past two weeks, more than 20 vessels, including oil tankers, have been attacked, with the intensity of incidents reaching its highest level since the beginning of the conflict.⠀Additional tensions come from renewed Houthi strikes and the threat of attacks on Saudi Arabia's oil infrastructure. Meanwhile, negotiations between Washington and Tehran on restoring safe navigation remain deadlocked. As a result, freight and insurance costs continue to rise, increasing the actual cost of oil transportation even without further increases in exchange-traded prices.⠀

Production recovery offers limited relief

⠀Nevertheless, September data indicate a partial recovery in oil production across the Persian Gulf countries. Saudi Arabia increased output to approximately 8.4 million barrels per day, the highest level since the beginning of the conflict, while Iraq raised production to 4.4 million barrels per day. This became possible through the use of alternative export routes and more complex logistics arrangements.⠀Another factor behind today's correction was reports of a possible increase in Russian diesel supplies, which somewhat eased concerns about shortages of refined petroleum products. Meanwhile, production in the Gulf of Mexico continues to recover following Hurricane Isaias, although approximately 30% of offshore production capacity remains shut down.⠀

U.S. inventory reports and key price levels

⠀However, all these factors are unlikely to provide grounds for a sustained decline. The next important events will be the API report on October 14 and the release of EIA statistics on October 15, postponed due to the U.S. holiday. Following an unexpected decline of 3.19 million barrels in U.S. commercial crude oil inventories during the previous week, investors will assess whether tightness in the domestic supply-demand balance persists.⠀The rebound from support around $92.80 suggests a break above resistance near $94.50 and a rise toward $95.50–97.00. Pullbacks toward $93.50 may be used as buying opportunities, while a break below this support, as noted in WTI tests $95 resistance as Middle East risks and tighter inventories support prices, would increase the risk of a move below $93.00 and a decline toward $92.00–91.00.

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