WTI Price Forecast: Oil prices remain underpinned by Hormuz tensions and tighter supply outlook
- WTI rallies more than 3% as stalled US-Iran talks and Hormuz disruption fears keep supply concerns elevated.
- EIA warns that a prolonged closure of the Strait of Hormuz could push crude Oil prices another $20 higher.
- Technically, WTI maintains a bullish structure above key SMAs, though trend momentum remains moderate.
West Texas Intermediate (WTI) crude Oil rallies more than 3% on Tuesday as fading hopes for a near-term end to the US-Iran war continue to fuel concerns over supply disruptions through the Strait of Hormuz. At the time of writing, WTI is trading around $98.38 per barrel, holding above the middle of its war-driven trading range.
The US Energy Information Administration (EIA) said in its latest STEO report that global Oil trade and output may not return to pre-war levels until late 2026 or early 2027. The agency assumes the Strait of Hormuz will remain closed through late May before gradually reopening in June and normalizing later in 2026. The EIA also warned that if the strait stays shut through late June, crude Oil prices could rise another $20 per barrel above current forecasts.
Meanwhile, a Reuters survey published on Monday showed OPEC Oil output in April fell to its lowest level in more than two decades.
US-Iran negotiations remain deadlocked over Tehran’s nuclear program and control of the Strait of Hormuz, with US President Donald Trump warning that the ceasefire is “on massive life support."
Reuters reported on Tuesday that Iran has expanded its definition of the Strait of Hormuz into a “vast operational area” significantly wider than before the Iran war, according to a senior officer in the Islamic Revolutionary Guard Corps (IRGC) Navy. Fars and Tasnim reported that the strait’s operational width has expanded to between 200 and 300 miles from an earlier estimate of 20-30 miles.
The move has intensified fears that Iran is attempting to tighten its grip over the strategic chokepoint, which handles roughly 20% of global Oil shipments, increasing the risk of prolonged supply disruptions. This continues to keep a strong geopolitical risk premium in Oil markets, with WTI up more than 40% since the start of the Middle East war.
Technical Analysis:
On the daily chart, WTI US Oil keeps a constructive bullish bias as it holds well above the 50-day Simple Moving Average (SMA) and comfortably over the longer-term 100-day and 200-day SMAs at roughly $77 and $69.
The relative strength index (RSI) around 54 suggests moderate, non-overbought upside momentum, while the subdued Average Directional Index (ADX) near 18 hints that the recent advance is unfolding within a relatively weak directional trend despite volatility staying elevated per the Average True Range (ATR).
On the downside, immediate technical cushioning emerges from the 50-day SMA at $93, with additional demand expected around the prior horizontal support zone near $85.00, before deeper medium-term floors at the 100-day SMA at $77.37 and the 200-day SMA at $69.14 come into play.
As long as WTI holds above these stacked moving-average supports, pullbacks are likely to be treated as corrective pauses within the broader upswing rather than a decisive trend reversal.
(The technical analysis of this story was written with the help of an AI tool.)
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.
