Oil News: Crude Oil Traders Eye Hormuz Traffic as Supply Risk Builds

Strait of Hormuz Traffic Collapses as Supply Risk Builds

Crude oil finished higher on Friday with supply restrictions through the Strait of Hormuz still controlling the direction. The temporary U.S.-Iran agreement expired without new talks, sanctions threats escalated from both sides, and strait traffic dropped to single digits on Thursday. The gains were modest but the message was clear. Late selling hit on an Iran headline and the market closed above it. Refined products gave crude another layer of support that had nothing to do with the Middle East. WTI finished the session within reach of the July main top and both contracts held the uptrend.

October West Texas Intermediate crude oil futures settled Friday at $87.06, up $0.23, or 0.26%. October Brent crude settled at $94.39, up $0.61, or 0.65%. It was the first day October traded as the front-month contract.

The Deal Is Gone and Sellers Still Cannot Break the Bid

The temporary U.S.-Iran agreement that was meant to ease the conflict and reopen the Strait of Hormuz expired this week. Neither side moved to begin new talks. That left the oil market without the one development that could quickly remove the risk premium.

On Thursday, only seven commodity ships crossed the strait. That was half the number from the previous day and far below normal traffic. Ship-tracking data has shown traffic running at very low levels for weeks. Before the fighting began earlier this year, about one-fifth of global oil and gas supplies moved through the waterway.

The major Gulf producers remain limited by the restricted passage. Iran’s own exports were already under pressure from a U.S. naval blockade. Extra oil is moving through pipelines and routes outside the Persian Gulf, but those barrels are not filling the gap.

President Trump said Friday the United States would begin an economic operation against Iran to force Tehran to abandon its nuclear program. Iran came back with its own warning. That is not the kind of exchange that leads to a reopened shipping lane.

Late selling hit on reports that Iran had discussed ending the fighting from a position of strength. The market sold the headline and came right back. One conversation about ending a fight is not the same as ending it. Buyers still own the supply side of this trade. Bears are waiting on diplomacy, and diplomacy is going nowhere.

Refined Products Are Giving Crude a Wider Base

Gasoline and diesel futures also finished higher Friday. September gasoline gained more than $0.08 per gallon and diesel posted smaller but steady gains. The gap between diesel futures and crude oil rose above $100 a barrel for the first time. U.S. refiners are making strong profits and the products side of the complex is bidding for barrels alongside the supply trade, not just riding it. The bid is coming from more than one direction now.

Ukraine’s reported strike on a Russian refinery added another reminder that supply risk is not isolated to the Middle East. The Strait of Hormuz remains the main issue, but damage to refining capacity elsewhere keeps the supply side tight across more than one region.

Daily October WTI Crude Oil Futures Technical Analysis

October WTI crude oil futures settled higher on Friday and within striking distance of July 23 main top at $88.07. A move through this level will reaffirm the uptrend. If it creates enough upside momentum then look for the rally to possibly extend into the May 18 main top at $91.23.

On the downside, the key level to watch is $83.45. A trade through this level will shift momentum to the downside.

Daily October Brent Crude Oil Futures Technical Analysis

October Brent Crude Oil Futures settled higher on Friday with the international benchmark nearing main top resistance at $95.30. A trade through this level will reaffirm the current uptrend and put the May top at $99.12 on the radar. There is room for a short-term pullback, but a trade through $90.40 will change the minor trend to down and shift momentum to the downside.

What to Watch

Oil enters next session with the supply threat still in place. Ship traffic through the Strait of Hormuz, any U.S. action against Iran, and Tehran’s response are the headlines that move this market. A real diplomatic breakthrough can knock the risk premium out of crude fast, and the late selling Friday showed that traders are ready to take profits on any sign of an opening. That is the one thing that changes the trade. Everything else keeps the bid where it is.

Refined products are helping hold the floor under crude. Strong gasoline and diesel demand gives buyers another reason to stay involved even on sessions where the Middle East headlines go quiet.

WTI is sitting just below the July main top and Brent is pressing resistance of its own. Both contracts settled with the uptrend intact. The supply disruption is real and until the strait reopens, sellers are trading against it.

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