Oil Price Forecast: Saudi Pipeline Outage Puts $120 in Focus

Oil prices rallied as fresh attacks raised concerns about supplies in the Middle East. The damage kept the East-West pipeline of Saudi Arabia out of service. The capacity of this pipeline is about 4 million barrels per day to the Red Sea and it is also used for exports to bypass the Strait of Hormuz.

The passage of shipping traffic through the strait dropped sharply. This raised fears that less oil could reach the global market. Brent crude oil reached $108 while WTI oil reached the $102 level.

The next move in the oil market will likely depend on how long the pipeline remains offline. The long outage may take up to 4% of the world’s oil supply off the market.

A further attack or larger conflict in the region could drive prices higher. But the speedy pipeline resumption and return to shipping through Hormuz may alleviate supply issues and bring prices down.

Some relief may also be on the horizon from Russia-Ukraine ceasefire that applies to energy facilities but the developments in the Gulf are the key factor influencing oil prices.

WTI Crude Oil Price Forecast: A Break Above $104 Targets $110

The daily chart for WTI crude oil shows that the price has broken the triangle pattern at $86 in August 2026. After the breakout, the price pushed higher toward the $104 resistance area. A break above $104 will likely push prices further towards the $110 area. The immediate support remains in the $92.50-$96 zone.

The 50-day SMA remains above the 200-day SMA and both SMAs are rising. This suggests positive price action in the WTI crude oil market. But the RSI has reached overbought levels in the short term. Therefore, a correction or consolidation may follow. The price action in the WTI market during the past few days has been strongly bullish and supports positive price action in the short term.

The 4-hour chart for WTI crude oil also shows strong breakout above the $97 area. This breakout is defined by the descending trend line that stretches from the April 2026 peak.

The overall price structure from April to August 2026 remains bullish. Price is now challenging the immediate resistance at $104 which is slightly below the May 2026 high.

The price consolidation near $104 suggests positive price action in the WTI crude oil market. Therefore, a break above $104 will likely push prices towards the $110 area in the short term.

Brent Crude Oil Price Forecast: A Break Above $113 Opens the Path to $120

The daily chart for Brent crude oil shows positive price action as the price broke above the $95 area. This breakout pushed the price to the initial resistance at $113. A break above this level will likely open the way for further upside towards the $120 area.

The immediate support remains at the $102 area. The 50-day SMA has crossed back above the 200-day SMA, which indicates positive price action. But the RSI is now consolidating near overbought levels which suggests that prices may consolidate or move lower before the next move higher.

The weekly chart for Brent crude oil also shows strong positive price action during the past three weeks. Brent crude oil gained around 10.70% last week, which suggests strong gains. This indicates that prices may trade toward the $120 area in the short term as long as the price remains above the $100 level.

Bottom Line

The supply risks in the Middle East and strong technical momentum continue to support oil prices. A prolonged Saudi pipeline outage or fresh attacks could push WTI to $110. Brent could also rise to $113 and then $120. But the overbought RSI readings may lead to correction in the short term. The pipeline restart and stronger shipping activity through Hormuz could ease supply concerns and pull prices lower. In my view, the outlook for oil remains bullish as WTI remains above the support zone of $92.50-$96 and Brent remains above $100.

Read more: WTI and Brent Target $120 as Supply Risks Escalates