Oil News: Can WTI and Brent Extend the Rally as Hormuz Supply Risk Persists?

WTI and Brent Hold Supply-Risk Premium

This was not a normal week. Brent went from the mid-$80s to above $100 and WTI ran from $80 to above $92 after the shipping problem jumped from Hormuz into the Red Sea. The Houthis went after Saudi tankers near Bab el-Mandeb the same week Iran’s Revolutionary Guards told the market no ship enters or leaves Hormuz without their coordination. Two exits impaired at the same time is what produced a 10%-plus weekly rally and neither one has reopened.

September WTI crude oil futures settled last week at $90.47, up $8.70 or +10.64%. September Brent crude oil futures settled at $102.00, up $10.44 or +11.83%.

Saudi Arabia’s Export Routes Are Both Under Fire

Yanbu and the Red Sea were supposed to be the answer when Hormuz went bad. That lasted until the Houthis started hitting Saudi tankers near Bab el-Mandeb and the weekend brought more reports of attacks on Saudi oil sites with no sign the shipping risk is easing. JODI data showed Saudi exports were already falling for three straight months before the blockade even started. The kingdom has the spare capacity but right now it is stuck behind two chokepoints and the market is pricing that reality, not the barrels sitting in the ground.

Refiners are chasing barrels from every other source they can find. North Sea, West African and Mediterranean grades are all getting bid up as Middle East deliveries slow down. Aramco is offering cargoes through Egypt’s Sidi Kerir terminal but that adds time, adds cost and the biggest tankers cannot move fully loaded through every alternative. Diesel margins are still running near record levels and refiners are not going to stop buying crude when the fuel market is paying them to run hard. Russian crude discounts that were giving Indian refiners some relief earlier this month have disappeared. Every alternative barrel is now priced like a scarce barrel.

Peace Talks Need Ships, Not Headlines

Pakistan and China reportedly explored restarting U.S.-Iran talks late last week and that was enough to trigger profit-taking after the run. The selling made sense after five straight sessions of gains but nobody who sold Friday was betting that Hormuz reopens next week. The U.S. completed a thirteenth consecutive night of strikes on Iranian targets the same day the diplomatic headline hit. Trump said he is close to deciding on a massive attack. Rubio called the approach a head for an eye.

The market has seen this pattern before. A diplomatic headline knocks crude lower for a session, the military keeps striking overnight and the premium rebuilds by the following morning. Sellers who press this market lower have to hold through the risk of another tanker attack, confirmed damage to Saudi export infrastructure or a broader U.S. operation over the weekend. One headline brought the selling Friday. One headline can bring the buying back Monday.

Weekly September WTI Crude Oil Futures

September crude oil futures finished sharply higher last week. After finding support at the 52-week moving average during the week ending July 3, the market overcame a pair of retracement zones and is now positioned to attempt a breakout over a main top. Multiple tops from previously traded nearby contracts are the primary upside targets.

Given the weekly close at $90.47, the nearest support zone is $84.53 to $81.21. The main support zone is $75.40 to $70.70. This represents 50% to 61.8% of the rally from $55.49 to $95.30. The final support is the 50-week MA at $68.57.

The first upside target is the main top at $95.30. Taking out this level will change the swing chart trend indicator to up. If this generates enough upside momentum then the psychological $100 level will be the next target. This is followed by a previous nearby futures contract top at $105.21.

The latest swing chart projection has put $106.93 on the radar.

Weekly September Brent Crude Oil Futures

September Brent crude oil futures finished strong last week and in a position to test its last main top at $103.26. A sustained close over the psychological $100 level could generate more upside momentum, especially if new buying takes out the main top. Potential upside targets are $108.34 and $115.30.

On the downside, near-term support is a retracement zone at $90.61 to $86.70. Additional support is $81.04 to $75.80. The best support remains the 52-week moving average at $73.37.

The latest swing chart projection has put $114.57 on the radar.

What to Watch

Tanker traffic is the only signal that matters next week. Regular Hormuz transits, lower insurance costs and Saudi cargoes moving through the Red Sea without diversion would give sellers something real to lean on. None of that happened last week and the weekend brought more reports of shipping risks, not fewer. Another tanker attack or a broader U.S. military move brings buyers back immediately and the conflict does not have to expand into a new country to keep crude bid. It just has to keep restricting the two routes already under pressure.

Both contracts finished the week above key breakout levels with WTI positioned to test a main top that would flip the swing chart trend to up. Brent is sitting just below its last main top with the projection pointing well above current levels. The rally has room to extend as long as the supply picture stays impaired. A pullback needs proof that physical flows are improving and until that shows up, sellers have nothing to lean on except positioning after a 10%-plus weekly gain.

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