Oil Price Forecast: Volatility Rises as Iran and Venezuela Fuel Supply Anxiety

Investors locked in oil prices at record levels in January as they feared supply from key producers such as Iran and Venezuela. Traders bought an enormous amount of contracts for WTI Midland in Houston. Trading volumes hit historic highs as prices approach the highest levels in six months. This heavy hedging demonstrates how much anxiety about risk of supply can generate heavy short term demand for protection in the market.

Moreover, the geopolitical uncertainty over Iranian crude exports added a risk premium to global oil prices in early 2026. Fears of disruptions to supplies around the Strait of Hormuz helped lift benchmarks despite attempts by the markets to balance fears of oversupply. Meanwhile, weather disruptions to production in the US also helped tighten near term supplies, adding to upward pressure.

At the same time, flows of new crude from Venezuela oil raised concerns about competition in key export markets and added to the complexity of supply picture. Traders also had to consider defusing tensions and possible talks to lower the geopolitical risk premium on oil. As a result, price of oil has experienced volatility but has been sensitive to risk events and actual changes in supply and demand.

Long-Term Oil Outlook: Bearish Trend Persists Below $80 Resistance

The long-term outlook for oil remains bearish as long as WTI crude oil remains below $80. The monthly chart below shows that the symmetrical triangle in WTI oil from November 2022 to May 2025 was broken down in April 2025. After the breakout, the price found support at the mid-level of the descending channel at $55 and produced a rebound toward $70.

However, the price is now consolidating below $70, which indicates uncertainty in oil. As long as the WTI crude oil price remains between $70, it is likely to consolidate in a tight range. A break below $55 will indicate a strong drop in oil, similar to what happened after August 2014.

However, ongoing geopolitical uncertainty and the trade war have introduced volatility in oil. The RSI trends below the mid-level, which indicates negative pressure. A recovery above the mid-level will indicate further upside in the oil market.

Short-Term Oil Price Levels: Consolidation Dominates Below $70

These consolidations are also observed on the daily chart, which shows strong fluctuations below the descending trend line. The resistance of this trend line now sits around $70. The price has already broken the 200-day SMA, which indicates further upside in the short term. However, the trend remains bearish as long as the price stays below $70. The RSI on the daily chart is also dropping from overbought levels, which suggests the price may trend lower.

These consolidations are also observed on the 4-hour chart, which shows important levels of $62 and $65. A break of these levels will indicate next move. A break below $62 will introduce a downside move toward the $55 area. However, a break above $65.50 will take the price toward the $70 region. As long as the price remains between these levels, the next move in the oil market remains uncertain.

The hourly chart for WTI crude oil shows constructive action above $55. However, as long as the price remains below $70, uncertainty is observed. The price continues to rebound above the shaded area of $60- $62. However, the consolidation and failure to break above $65.50 indicate continued short-term pressure.

Final Words

Oil prices continue to consolidate within a bearish long-term trend. While supply fears from Iran and Venezuela fueled record hedging and strong rebounds in January, the price is still struggling to break above $70. As long as WTI crude trades between $55 and $70, the market is set to remain range-bound and the state of volatility.

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