Oil News: Strait of Hormuz Stable—Neutral Oil Outlook Despite Middle East Tensions

Crude Oil Prices Ease as Middle East Tensions Fail to Disrupt Flows

Crude oil futures slipped on Monday, giving back early session gains as traders assessed the limited impact of renewed Israel-Iran hostilities on oil production and exports. West Texas Intermediate (WTI) briefly rallied to $77.49—just shy of last week’s high—but failed to break key resistance near $78.09.

Friday’s surge of 7% had pushed oil to its highest level since January, driven by geopolitical risks. However, Monday’s reversal reflects a lack of direct threats to supply lines, particularly through the strategically vital Strait of Hormuz.

At 11:02 GMT, Light crude oil futures are trading $60.22, down $0.20 or -0.33%.

OPEC Output Intact as Strait of Hormuz Risks Weighed

Iranian missile strikes on Israeli cities and retaliatory attacks over the weekend raised alarms, yet crude markets stabilized as oil flows remained uninterrupted. Traders remain laser-focused on the Strait of Hormuz, a chokepoint handling roughly 18-19 million barrels per day—nearly 20% of global demand.

Despite the violence, Iran’s oil infrastructure remains operational, with exports above 2 million bpd and total production near 3.3 million bpd. Analysts note that the Organization of the Petroleum Exporting Countries (OPEC) and its allies have sufficient spare capacity to absorb any moderate disruption.

Should Iranian exports falter, China—the main buyer of Iranian crude—would likely shift to alternate Middle Eastern or Russian grades, tightening freight availability and lifting shipping costs. Brent-Dubai spreads could narrow, adding pressure to Asian refinery margins.

Fed Caution and Refinery Output Slowdown Weigh on Sentiment

Adding to bearish sentiment, China’s refinery throughput dipped 1.8% year-on-year in May, hitting its lowest since August due to seasonal maintenance. The decline from both state-owned and private refineries suggests a softer demand profile that could weigh on future price support.

Meanwhile, geopolitical rhetoric offered little clarity. Iran signaled unwillingness to enter ceasefire talks while under attack, and U.S. President Trump reiterated support for Israel without committing to diplomatic intervention. G7 leaders are discussing conflict resolution, but market participants remain skeptical of any near-term breakthrough.

Oil Prices Forecast: Near-Term Rangebound as Geopolitical Premium Fades

Technically, crude remains well supported above the 200-day moving average at $66.47. But resistance near $78.09 and $80.47 is proving tough to breach without a material supply shock. With current supply lines intact and refinery demand easing, crude oil markets appear poised to consolidate near-term.

Outlook: Neutral-to-Bearish unless Strait of Hormuz faces credible threat.

More Information in our Economic Calendar.