Oil News: Crude Oil Rallies as OPEC Production Risks Mount in Israel-Iran Conflict

Geopolitical Risk and Fed Policy Keep Oil Bulls in Control

Crude oil futures extended gains Thursday as traders continued to price in geopolitical risk premiums and digest a dovish signal from the U.S. Federal Reserve. With the market still open, WTI is trading around $74.50, holding near session highs after testing resistance at $76.10 earlier this week.

The rally is driven by intensifying Middle East tensions and expectations for easier monetary policy. The Israel-Iran conflict has entered its seventh day, with Israeli strikes hitting Iranian nuclear sites and Tehran responding with missile attacks on Israeli infrastructure. This escalation has injected fresh uncertainty into oil markets, with traders anticipating further volatility depending on the next geopolitical move.

OPEC Supply Risks Intensify as Strait of Hormuz Becomes a Flashpoint

Iran, OPEC’s third-largest producer with 3.3 million barrels per day of output, is at the center of supply concerns. Around 18–21 million bpd of oil moves through the Strait of Hormuz—a critical chokepoint along Iran’s southern coast. Any military escalation that disrupts this artery could send oil prices sharply higher.

Goldman Sachs estimates a geopolitical premium of $10 per barrel is now baked into crude benchmarks. Analysts warn this could rise if the U.S. decides to support Israeli military actions. President Trump has yet to clarify Washington’s position, keeping the market on edge. IG analyst Tony Sycamore says traders are bracing for either a U.S. entry into the conflict or a turn toward de-escalation.

Fed Signals Rate Cuts, Lifting Demand Outlook

On the demand side, the Federal Reserve held interest rates steady on Wednesday but indicated two rate cuts are possible by year-end. This pivot boosted hopes for stronger economic activity in the second half, which would likely translate into higher oil demand.

U.S. inventory data also lent support. The EIA reported the largest crude stockpile draw in over a year, suggesting tighter domestic supply or robust consumption. That surprise draw helped reinforce bullish sentiment already in motion due to external risks.

Technical Setup Points to Continued Upside

WTI is now comfortably above its 50-day and 200-day moving averages—currently at $61.40 and $65.05, respectively—signaling sustained bullish momentum. Key resistance levels to monitor include $76.57 and $78.95. Support is building at $67.44, and dips may be viewed as buying opportunities if conflict risk and broader economic signals remain intact.

Market Outlook: Bullish

With geopolitical tensions unresolved, monetary policy turning accommodative, and supply data reinforcing tightness, the near-term crude oil forecast remains bullish. Traders should stay alert to developments in the Israel-Iran standoff and any signals from OPEC+ or the U.S. administration that could influence risk pricing.

More Information in our Economic Calendar.