Oil Rises as Middle East Risks Remain the Main Market Driver

Crude oil prices moved higher on Friday, with Brent trading around US$96 per barrel and West Texas Intermediate (WTI) near US$92 per barrel. On a weekly basis, Brent has gained about 7.1%, while WTI has surged around 9.8%, putting oil on track for its strongest weekly advance since mid-July. The rally has been driven mainly by rising tensions between the United States and Iran, which have renewed concerns over possible supply disruptions from the Middle East.

From a fundamental perspective, market attention remains focused on the Strait of Hormuz, one of the world’s most important energy shipping routes. Tensions have intensified following the latest U.S. strikes on Iran and Tehran’s response to maritime activity in the region. Iran has reportedly expanded the list of vessels considered non-compliant with its requirements, while traffic through Hormuz continues to be a major source of uncertainty for the market. These conditions are keeping the geopolitical risk premium elevated and discouraging traders from taking overly aggressive bearish positions.

Threats to Iran’s energy infrastructure are also adding pressure to the supply outlook. Israeli officials have signaled the possibility of attacks on Iranian energy facilities, while Washington has warned that diplomatic discussions could be delayed if attacks on commercial shipping continue. If the escalation spreads to production facilities, export terminals, or major tanker routes, oil prices could receive another significant boost.

However, several factors could limit further upside. Russia has again signaled openness to a possible resolution of the conflict in Ukraine, which could ease some concerns surrounding Russian energy supplies. In addition, Iraq increased its oil exports to around 2.34 million barrels per day in August and could raise shipments further in September. This additional supply could help offset market tightness if disruptions from Iran do not develop into a more substantial decline in exports.

On the demand side, markets are also awaiting the U.S. employment report due later today. Non-Farm Payrolls data could influence expectations for Federal Reserve policy, the U.S. dollar, and the outlook for U.S. economic growth. Strong labor data could support expectations for energy demand, but at the same time increase the likelihood that interest rates remain higher for longer. Conversely, excessively weak data could weigh on the oil demand outlook even if it also puts pressure on the dollar. As a result, oil’s reaction to the NFP report will likely depend on how heavily the market weighs demand concerns against geopolitical risks.

From a technical perspective, Brent continues to maintain a bullish structure after breaking above the US$94 area and moving toward the psychological US$96-US$97 zone. The US$97 level is the nearest resistance, as prices have already tested that area during this week’s trading. If Brent manages to break and hold above US$97, bullish momentum could extend toward the psychological US$100 per barrel level.

On the downside, the US$94-US$95 area serves as Brent’s initial support zone. As long as prices remain above this range, the short-term bias remains positive. A break below US$94 could open the door for a correction toward US$92, particularly if there are signs of U.S.-Iran de-escalation or improved oil flows through the Strait of Hormuz.

For WTI, prices are trading around US$91.56 after posting gains for four consecutive sessions. The US$92 level is the nearest psychological resistance, followed by US$94-US$95 if buying pressure remains strong. Initial support is located around US$90, followed by the US$88-US$89 area. As long as WTI remains above US$90, its short-term technical structure continues to favor the bullish side.

Overall, the bias for oil today remains bullish as supply risks related to the U.S.-Iran conflict and uncertainty surrounding the Strait of Hormuz continue to dominate market sentiment. However, the sharp gains recorded throughout the week have also increased the risk of profit-taking. Brent could retest US$97 and potentially US$100 if tensions escalate further, while signs of de-escalation or improving shipping flows could trigger a rapid correction from current levels. (mrv)

Source: Newsmaker.id