WTI Oil fluctuates near six-week high as Middle East tensions fuel volatility

West Texas Intermediate (WTI) Oil sees two-way price swings on Wednesday as escalating tensions in the Middle East keep energy markets volatile and the geopolitical risk premium elevated. At the time of writing, WTI trades around $89.70 per barrel after reaching an intraday high of $90.78, its highest level since July 24.

Iran’s Islamic Revolutionary Guard Corps (IRGC) said on Wednesday that two Oil tankers struck naval mines while attempting to transit the waterway. According to the IRGC, the vessels were disabled and their crews forced to disembark after they ignored warnings against taking what it described as an “illegal route.”

Oil prices also draw support from a larger-than-expected decline in US inventories. The Energy Information Administration (EIA) reported that crude stocks fell by 4.45 million barrels last week, well above expectations for a 1.1-million-barrel draw and reversing the previous week’s modest increase of 95,000 barrels.

Strategists at Brown Brothers Harriman argue that "further upside in Oil prices appears limited as Persian Gulf oil exports recover." They highlight Goldman Sachs estimates that oil flows from the region have "returned to roughly two-thirds of their pre-war level of 20 million barrel per day," a view they say is broadly consistent with the US Energy Secretary’s assessment that, on average, "8 million barrels a day are passing through the Strait of Hormuz, while another 4 to 5 million barrels are bypassing it through pipelines." Together, these figures suggest that supply disruptions are easing even as geopolitical tensions remain elevated.

Looking ahead, traders await the OPEC+ meeting on Sunday. The alliance is likely to leave its Oil production policy unchanged for October, Reuters reported on Wednesday, citing three sources familiar with the matter.

Technical analysis

On the daily chart, WTI Oil retains a constructive bias as it holds comfortably above the 100-day and 200-day Simple Moving Averages (SMAs). However, the $90-$92 region forms a key resistance zone capping the immediate upside.

The Relative Strength Index (RSI) stands near 64, while the Moving Average Convergence Divergence (MACD) remains in positive territory. However, the Average Directional Index (ADX) near 16 suggests that the broader bullish trend lacks strength.

A sustained break above $92 could open the door toward $95, followed by the psychological $100 mark. On the downside, the 100-day SMA around $85 offers initial support. A decisive break below this level would expose the 200-day SMA near $77, while the horizontal floor around $67-$65 would come into focus only if the moving-average supports fail.