WTI crude oil is approaching a key technical inflexion point as renewed US-Iran tensions, near-term supply concerns and improving momentum strengthen the case for a potential bullish breakout.
Key takeaways
- WTI gained 7.6% in August as unresolved US-Iran tensions and disruption risks around the Strait of Hormuz supported oil prices.
- WTI backwardation points to near-term supply tightness, while renewed US-Iran military strikes have revived fears of further oil supply disruptions.
- A break above $88.64 may expose $93.70 and $99.55/$101.00, while a daily close below $80.28 would invalidate the bullish scenario.
After erasing almost all its gains seen at the onset of the US-Iran conflict on 28 February 2026, WTI crude oil rallied by 28.4% to close at $86.94/barrel on Monday, 31 August 2026, from an intraday low of $67.73/barrel printed on 2 July 2026.
The recent firming up of oil prices over the past four weeks has been attributed to the lack of a clear resolution to a permanent US-Iran ceasefire agreement, with the Strait of Hormuz, which transits roughly 30% of global energy flows, failing to return to pre-war operational levels.
Oil ended the month of August on a bullish footing, with WTI crude oil futures recording a monthly gain of 7.6%, finishing among the top five major global cross-asset classes (see Fig. 1).
Fig. 1: Global cross-asset performances from 3 Aug to 31 Aug 2026 (Source: MacroMicro). The information presented is historical information, and past performance is not indicative of future performance.
Near-term oil supply shortages prevail
Fig. 2: WTI calendar spread as of 28 Aug 2026 (Source: MacroMicro). The information presented is historical information, and past performance is not indicative of future performance.
Based on data as of Friday, 28 August 2026, the WTI calendar spread (WTI futures 12-month forward price minus WTI futures spot price) has continued to be in a negative reading of -12.35, which is in a state of backwardation that suggests perceived near-term supply shortages, where immediate demand is pushing spot prices above futures prices (see Fig. 2).
Media outlets reported on Monday, 31 August 2026, that the US and Iran exchanged strikes for the first time in about a month, with US forces hitting an island in the Strait of Hormuz and Iran responding with attacks on the United Arab Emirates and Jordan1.
This latest round of military confrontations sparked new fears of oil supply shortages, which, in turn, may trigger a wave of higher oil prices.
Let’s now unpack more details from a technical analysis perspective.
Eyeing a potential medium-term bullish breakout
Fig. 3: West Texas Oil CFD medium-term trend as of 1 Sep 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.
The recent 9.3% decline in the West Texas Oil CFD (a proxy for WTI crude oil futures) from the 88.64 intraday high on 20 August 2026 has stalled and staged an 8.7% rebound after a retest near its 50- and 200-day moving averages on 26 August 2026 (see Fig. 3).
Price action has re-entered above the 20-day moving average, coupled with a bullish breakout on its 4-hour MACD trend indicator above its centreline.
These observations suggest a potential revival of medium-term bullish momentum.
Watch the 80.28 key medium-term pivotal support, and a clearance above the 88.64 intermediate resistance (also the medium-term descending trendline in place since the 7 April 2026 high) may trigger a potential medium-term bullish breakout scenario, with the next medium-term resistances at 93.70 and 99.55/101.00.
However, a failure to hold and a daily close below 80.28 would invalidate the bullish scenario, exposing the next medium-term supports at 74.70 and 71.64.
This article and its contents are intended for educational purposes only and should not be considered trading advice.
