September WTI crude oil futures were trading at $92.31 late Thursday, up $10.54 or 12.89% for the week. The contract posted a weekly low at $79.58 before climbing to a weekly high at $92.31.
This was not a normal risk-premium rally. WTI started the week with the Strait of Hormuz already impaired, then gained speed as the market realized Saudi Arabia’s alternate export route through the Red Sea was also under threat. By Thursday, traders were no longer pricing one damaged chokepoint. They were pricing a supply system with fewer ways to move barrels, higher freight costs, tighter fuel markets and no clear path to a ceasefire.
Hormuz Risk Returned to the Forefront
The first driver was the worsening U.S.-Iran conflict and the damage it was doing to shipping through Hormuz. Iran’s Revolutionary Guards said the strait was under its control and effectively closed while U.S. military action continued. That is a direct threat to one of the world’s most important oil transit routes.
The market had seen tension around Hormuz before and initially treated it as a problem diplomacy could eventually solve. That view faded as U.S. strikes continued night after night and Iran answered with threats and attacks around regional shipping. By Thursday, the U.S. military had completed its twelfth straight night of strikes on Iran.
A tanker fire near Oman added to the concern. Iran said the vessel was trying to follow a mined route in southern Hormuz, while two other…
September WTI crude oil futures were trading at $92.31 late Thursday, up $10.54 or 12.89% for the week. The contract posted a weekly low at $79.58 before climbing to a weekly high at $92.31.
This was not a normal risk-premium rally. WTI started the week with the Strait of Hormuz already impaired, then gained speed as the market realized Saudi Arabia’s alternate export route through the Red Sea was also under threat. By Thursday, traders were no longer pricing one damaged chokepoint. They were pricing a supply system with fewer ways to move barrels, higher freight costs, tighter fuel markets and no clear path to a ceasefire.
Hormuz Risk Returned to the Forefront
The first driver was the worsening U.S.-Iran conflict and the damage it was doing to shipping through Hormuz. Iran’s Revolutionary Guards said the strait was under its control and effectively closed while U.S. military action continued. That is a direct threat to one of the world’s most important oil transit routes.
The market had seen tension around Hormuz before and initially treated it as a problem diplomacy could eventually solve. That view faded as U.S. strikes continued night after night and Iran answered with threats and attacks around regional shipping. By Thursday, the U.S. military had completed its twelfth straight night of strikes on Iran.
A tanker fire near Oman added to the concern. Iran said the vessel was trying to follow a mined route in southern Hormuz, while two other tankers turned back. Whether every claim is confirmed immediately is not the main issue for crude traders. Tanker owners, insurers and refiners react to the risk of a route becoming unusable before the physical supply loss is fully measured.
That is why WTI kept climbing even when the market had already moved sharply higher earlier in the week.
The Red Sea Became a Second Supply Problem
The bigger change came when Yemen’s Houthis said they struck two Saudi oil tankers near the Bab el-Mandeb strait. Saudi Arabia had been using its Red Sea export system as a pressure valve when Hormuz became dangerous. Crude could be moved west to Yanbu instead of relying entirely on Gulf routes.
That workaround is now under fire.
The attack forced the market to consider what happens if Saudi barrels cannot move freely through either Hormuz or the Red Sea. Some cargoes were still getting through on Thursday. Two Chinese supertankers carrying about 4 million barrels of Saudi crude exited the Red Sea through Bab el-Mandeb. But successful passage does not mean the route is secure.
The market saw vessels reverse course earlier in the week and saw other tankers slow or wait because of security concerns. That means longer voyages, higher insurance costs, fewer available ships and delayed delivery schedules. Those costs eventually show up in the price refiners are willing to pay for crude.
Goldman Sachs estimated that nearly 9 million barrels per day moved through Bab el-Mandeb during the past month. Nearly 4 million barrels per day of that flow could be difficult to reroute if multiple chokepoints remain blocked. That is the number behind the rally. The world has oil, but getting it to the right refinery at the right time is becoming much harder.
Diesel Margins Confirmed the Physical Tightness
The fuel market gave crude buyers another reason to stay aggressive. European diesel margins hit a record $66.25 per barrel on July 17 and remained near that level this week.
Russian refinery damage and restrictions on diesel exports had already tightened the fuel market before the Red Sea threat expanded. Refiners are still willing to bid for crude when diesel margins are this strong because the fuel market is paying them to keep running.
That is important for WTI. Strong refining economics create a floor under crude demand even as prices rise. Refiners are not simply buying barrels for storage. They are buying barrels because diesel, gasoline and other fuels remain valuable.
Alternative supply is also becoming more expensive. Russian crude discounts to Indian refiners have faded as buyers compete for cargoes outside the Middle East. Russian barrels had provided a cushion for refiners dealing with disrupted Gulf supply. When that discount disappears, the market loses another shock absorber.
India has increased purchases of Russian crude and raised refined-product exports, helping Asia replace some missing Middle East and Russian fuel supply. But the numbers still show a tight market. Asia is receiving more product than it did in June, but imports remain below pre-conflict levels. Refinery output elsewhere is helping, not fixing the shortage.
Inventory Data Did Not Stop the Rally
The weekly U.S. inventory report offered bears a possible argument when crude stocks rose by 2 million barrels for the week ended July 17. Analysts had expected a draw.
Under normal conditions, a build of that size could pressure WTI. This week it barely mattered. The market was focused on export routes, tanker traffic and the risk that supplies already on the water would take longer to reach refiners.
The build also came after months of inventory draws and strategic-reserve releases. Global inventories are still under pressure from lower Middle East production, seasonal summer demand and fewer emergency barrels entering the market. One weekly increase does not change that broader picture.
Weekly Light Crude Oil Futures
Trend Indicator Analysis
September WTI crude oil futures are in a position to close sharply higher this week after recapturing a critical retracement zone at $81.21 to $84.53, which is now new support. Additional support is a longer-term retracement zone at $75.40 to $70.70 along with the 52-week moving average at $68.60. Controlling it all is the main bottom at $67.12.
The next upside target is the May swing top at $95.30. Taking out this level with conviction will put the psychological $100.00 level on the radar with additional targets $105.21 and $110.00. It will also change the main trend to up according to the weekly swing chart.
The first sign of weakness will be a closing price reversal top on the daily chart. If this creates enough downside momentum, we could see a pullback into the minor support zone at $84.53 to $81.21.
Weekly Technical Forecast
The direction of the Weekly September Crude Oil futures contract for the week ending July 31 is likely to be determined by trader reaction to $91.88.
Bullish Scenario
A sustained move above $91.88 will signal the presence of buyers, not just short-covering. This will put the market in a position to extend the gains into the main top at $95.30. Overtake this level, and the buying gets a little more serious with $100.00 or more the next objective.
Bearish Scenario
A sustained move under $91.88 will indicate the presence of sellers. The first area of focus will be $84.53 to $81.21. The second area of interest will be $75.40 to $70.70. This would be the last support before the 52-week moving average at $68.59.
Weekly Outlook
The next move depends on physical shipping, not another diplomatic headline. A credible ceasefire, safer tanker traffic through Hormuz and uninterrupted Saudi flows through Bab el-Mandeb would take pressure out of WTI quickly.
Until then, the market has to price the possibility that the world’s largest spare-capacity producer is trapped behind two dangerous routes. That is why WTI climbed from $79.58 to $92.31 in four sessions. The market is not paying for lost barrels alone. It is paying for the growing risk that there are no easy routes left to replace them.
Technically, trader reaction to $81.21 to $84.53 will tell us whether short-covering or new buying is driving the price action. A sustained move over $84.53 will indicate that buyers are being aggressive and willing to take out offers.
A pullback under $81.21 could drop prices back to $75.40 to $70.70, but this won’t necessarily be bearish. It could mean that buyers would rather passively bid than actively take out offers. We’re not going to turn totally bearish on crude oil unless the 52-week moving average at $67.98 fails to hold.
Technically, next week is about momentum and whether the rally can extend beyond $95.30. The market appears well supported, with buyers likely to step in on dips over the next several weeks. The key question is how much of that buying is fresh demand and how much is short-covering.
