WTI crude oil came close to hitting $78 yesterday before falling back after Trump gave his assurance, at least financially, on passage through the Strait of Hormuz here. But even so, it seems that no company is willing to take on that promise and risk getting their tankers shot down by the IRGC.
Again, the Strait of Hormuz is not officially closed per se. However, reports of tankers being shot down when moving through just means that the passage way is under de facto closure at the moment. Nobody is willing to take the risk to make their way across the strait.
According to Kpler data, there has just been three oil and gas tankers that have crossed the Strait of Hormuz since Monday. There are vessels on either side of the strait but no one is willing to go through it.
As the situation persists, we’re seeing oil prices rally back again today with WTI crude oil closing in on the $77 level:
Once again, the June 2025 highs around $77.10-50 is the key resistance region currently in play. But amid a push above the 200-week moving average (blue line), oil bulls will have a technical tailwind to help push the agenda. That especially if the US-Iran conflict is prolonged and the Strait of Hormuz remains shut down for transport.
As mentioned yesterday, the next key psychological level after is the $80 mark. And given long enough, traders might look into pricing in a default scenario where the strait is closed for an extended period of time. That could see a push from $80 to $100, or at least an attempt to get there, take flight rather quickly.
The limited gains for now is arguably owing to the narrative that some market players are still anticipating that Iran will be incapacitated soon enough, to the extent that it will allow the Strait of Hormuz to resume operations again. So, a shift in the default thinking is what is needed for oil prices to really go parabolic and I would argue that we are not quite there yet. That especially since there are signs of Iran’s offensive capabilities are diminishing by the day.
This article was written by Justin Low at investinglive.com.
