WTI Price Forecast: Growing internal war risks in Middle East support recovery to near $78
- The WTI Oil price recovers slightly further amid fears of a prolonged Hormuz closure and internal Middle East war risks.
- Global leaders condemn Iran-Oman proposal for control of navigation through Hormuz.
- Saudi Arabia is expected to step up its military attacks against Iran-aligned Houthis.
West Texas Intermediate (WTI), futures on NYMEX, extends Thursday’s recovery move slightly to near $77.80 during the day. The Oil price underperformed in the last two weeks on hopes of the Strait of Hormuz reopening, a critical chokepoint to almost 20% of global energy supply.
Last weekend, United States (US) President Donald Trump also said in a post on Truth Social that he suspended planned strikes on Iran as it has agreed to “Immediate, Complete, and Total OPENING OF THE HORMUZ STRAIT, and an end to Iran’s nuclear threat”.
However, the proposed US-Iran deal appears to be gripped by uncertainty, following remarks from Tehran that it is close to finalizing a proposal with Oman aiming for joint management of the chokepoint, resulting in a recovery in oil prices. The Iran-Oman proposal is expected to face backlash from global leaders who are supporting freedom of navigation through the passage.
Meanwhile, growing friction between Iran-aligned Houthis and Saudi Arabia, which started after the first ones declared the Saudi Arabia blockade, has fuelled fears of a prolonged energy supply disruption, a scenario that boosts oil prices.
Earlier in the day, a report from The Guardian showed that Saudi Arabia will likely step up its military attacks on Houthis for attacking the Najran province and Yemeni government troops.
WTI Technical Analysis
Trend: The WTI US Oil trades at around $77.80, maintaining a bearish near-term bias as it holds beneath the 20-day exponential moving average (EMA) at $79.32.
Momentum: The price retreat from the recent highs leaves spot WTI capped by this short-term trend indicator, while the Relative Strength Index (RSI) at 46.44 sits in neutral territory, hinting at cooling downside momentum but not yet signaling a bullish reversal.
Resistance: On the topside, immediate resistance is located at the 20-day EMA at $79.32, which needs to be reclaimed to ease the current bearish pressure and open the way towards the July 31 high at $85.11.
Support: Looking down, the August 5 low at $73.51 is the key support level; a break below the same would expose the oil price to the July low at $67.09.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
WTI Oil FAQs
What is WTI Oil?
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
What factors drive the price of WTI Oil?
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
How does inventory data impact the price of WTI Oil
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
How does OPEC influence the price of WTI Oil?
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.