Western Texas Intermediate (WTI), the US crude oil benchmark, surged more than 3% on Monday amid continued escalation in the Middle East after Iran carried out attacks on the United Arab Emirates (UAE), and sources cited by CNN in Dubai said they expected attacks on Iran from the US and Israel in the next 24 hours. At the time of writing, WTI is trading at $102.55 per barrel, having rebounded from intraday lows of $96.45.
Oil surges after UAE attacks and tensions in Hormuz, causing supply disruptions
The authorities of the United Arab Emirates have confirmed that a fire broke out at the Fujairah oil facility following an Iranian drone attack. The Ministry of Defense of the United Arab Emirates published on X that its forces intercepted three missiles and the fourth fell into the sea.
The United Arab Emirates announced its withdrawal from the Organization of the Petroleum Exporting Countries (OPEC), stating that it will produce enough crude oil for world markets without restrictions, while continuing to cooperate with other producers.
A U.S. admiral said Iran has targeted commercial ships and U.S. military ships with cruise missiles, adding that the U.S. blockade of Iran is exceeding expectations. He added that the United States eliminated six Iranian tiny boats trying to disrupt commercial shipping.
Iranian media claimed the regime targeted an American vessel, but Axios reported, citing a US official, that no attack took place. Meanwhile, President Donald Trump’s comments about possible renewed attacks on Iran if it “behaves inappropriately” cast doubt on the ceasefire.
Meanwhile, Iran’s Revolutionary Guard Navy released a map showing they are expanding their control zones near the Strait of Hormuz, which include the ports of Fujairah and Khorfakkan in the United Arab Emirates, as well as the coast of Umm Al Quwain, according to Iranian news agencies.
Over the weekend, US President Trump announced “Operation Freedom”, the aim of which is to free commercial ships in the Strait of Hormuz using the US Navy.
Meanwhile, South Korea reported a fire and explosion on a ship, while the United Arab Emirates accused Iran of a drone attack on a ship belonging to state oil company ADNOC in Abu Dhabi in the Strait of Hormuz.
On the data side, U.S. factory orders rose 1.5% m/m in March, exceeding the expected 0.5% escalate and up from 0.3% in February.
WTI Price Forecast: Technical Outlook
From a technical perspective, the WTI price is neutral or on an upward trend, and the buying trend is gaining momentum. The relative strength index (RSI) is above the neutral 50 level in bullish territory and heading higher. It is worth noting that the price action over the last few days is forming a bullish engulfing pattern on the chart, which indicates further growth.
If the WTI price rises above the intraday high of $103.86, expect a test of $104.00. Once broken, the next area of ​​concern will be the April 30 high of $107.35 and then $108.00.
On the other hand, oil could target lower if investors push prices below the $100.00 milestone. If settled, the next area of ​​interest would be the 50-day SMA at $89.65.
Frequently asked questions about WTI crude oil
WTI Oil is a type of crude oil sold on international markets. WTI stands for West Texas Intermediate, one of three main types, including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” due to its relatively low weight and low sulfur content. It is considered a high-quality oil that can be easily refined. It originates in the United States and is distributed through the Cushing Junction, considered the “Crossroads of the World.” It is a reference point for the crude oil market, and the WTI price is often quoted in the media.
Like all assets, supply and demand are key factors influencing the price of WTI crude oil. Therefore, global growth may drive increased demand and, conversely, faint global growth. Political instability, wars and sanctions can disrupt supply and affect prices. Another key factor shaping prices are the decisions of OPEC, the group of major oil-producing countries. The value of the US dollar affects the price of WTI crude oil because oil is mainly sold in US dollars, so a weaker US dollar can make oil more affordable and vice versa.
Weekly crude oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Administration (EIA) influence the price of WTI crude oil. Inventory changes reflect fluctuations in supply and demand. If the data shows a decline in inventories, it may indicate increased demand, which will result in an escalate in the price of oil. Higher inventories may reflect increased supply, which causes prices to fall. The API report is published every Tuesday and the EIA report the next day. Their results are usually similar and are within 1% of each other 75% of the time. EIA data is considered more reliable because it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 oil-producing countries that jointly decide on production quotas for member countries at meetings held twice a year. Their decisions often influence the prices of WTI crude oil. When OPEC decides to cut quotas, it can tighten supply, which will push up oil prices. OPEC increasing production has the opposite effect. OPEC+ refers to an expanded group that includes ten additional non-OPEC members, the most notable of which is Russia.
