WTI. Price analysis. Forecast. Geopolitics is driving oil prices

[Ben Graham]

On Wednesday, US West Texas Intermediate (WTI) crude jumped above the round level of 61.00, nearly reaching the very important 200-day SMA.

US crude quotes again hit the highest levels in two months amid escalating geopolitical tensions in the Middle East. Market participants remain focused on Iran, where domestic protests and heightened rhetoric among Tehran, Washington, and Tel Aviv heighten concerns of possible supply disruptions. Given that Iran remains one of the world's largest oil producers, any risks to its production or export flows are instantly reflected in prices.

The market also reacted to US President Donald Trump's statement of intent to impose an additional 25 percent tariff on countries that continue to do business with Iran. Although the actual impact of such measures on real shipment volumes remains uncertain, they have increased the geopolitical premium in prices and made the market more sensitive to political risks.

It is worth noting that, under current conditions, the rise in oil prices is driven more by geopolitical factors than by fundamental supply-and-demand drivers. At the same time, expectations of a partial restoration of supplies from Venezuela help limit the rally.

According to Reuters, large international companies, including Trafigura and Vitol, at the request of the US government, are preparing to provide logistical support for the resumption of Venezuelan oil exports. The first vessel could be loaded as early as later this week, which would increase supply on the global market.

Overall, the current dynamics of the WTI market reflect a balance between rising geopolitical risks, which keep prices above the round $61.00 per barrel level, and the prospect of increased supply, which restrains the development of a sustained bullish trend. In the near term, price fluctuations are likely to continue to depend on political events in Iran and on signals about the scale of Venezuela's export resumption.

From a technical point of view, resistance is now the 200-day SMA, above which prices will accelerate higher. Support is the round level of 61.00, below which the 100-day SMA helps bulls keep control of the market. If prices fall below it, bears will seize the initiative. For now, daily-chart oscillators are positive, and the bulls remain in control.

On Wednesday, for the best trading opportunities, attention should be paid to US data releases, including the oil inventory report.

The material has been provided by InstaForex Company - www.instaforex.com