WTI faces pressure near $102 despite persistent Middle East risks

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Oil prices face conflicting geopolitical signals

Diplomatic efforts offer limited relief to oil market

The main source of uncertainty remains diplomatic initiatives surrounding the conflict between the U.S. and Iran. According to reports from October 27, representatives of Saudi Arabia, Turkey, and Pakistan held talks with Iranian officials in Tehran, attempting to create conditions for easing tensions and preventing a new phase of military escalation.

The parties agreed to continue consultations on regional security issues, temporarily reducing concerns about further disruptions to oil supplies. However, reports also emerged of new Houthi attacks on Saudi infrastructure, including pumping stations along the East-West Pipeline and facilities near Riyadh Airport.

Saudi Arabia had not confirmed any damage at the time of these reports, so it is premature to assess potential losses in export capacity. The East-West Pipeline is particularly important because it allows Saudi Arabia to transport oil to the Red Sea, bypassing the Strait of Hormuz. Any disruptions to its operations could further complicate exports and increase the geopolitical risk premium in oil prices.

U.S. inventory data reveal regional supply imbalances

U.S. statistics continue to indicate a relatively tight physical supply balance. Additional support for the oil market came from a decline in gasoline inventories of nearly 3 million barrels, although an increase in distillate stocks of 1.68 million barrels somewhat weakened the positive impact of the data.

Meanwhile, crude oil inventories at Cushing increased by nearly 1 million barrels to 27.59 million, indicating persistent regional differences. U.S. production declined to approximately 13.3 million barrels per day, partly due to the lingering effects of disruptions at offshore fields. The next EIA report will be released on October 28, and another substantial decline in commercial inventories could support WTI even amid continued diplomatic optimism.

$102 support remains crucial amid military escalation threats

Against the backdrop of a tentative easing of tensions in the Middle East, bulls are currently unable to break through resistance near $104, while bears continue their attempts to break below support at $102, which would lead to a decline toward $101–100. Nevertheless, the U.S. has increased its military presence in the region, which, as I warned in the article WTI holds near $103 as diplomatic efforts clash with supply threats, could precede another military strike against Iran. Therefore, selling oil remains a high-risk strategy.

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