Oil Prices Rise as Supply Risks Return to Focus

Oil prices surged at the start of the week as renewed tensions in the Middle East heightened concerns over global crude supplies. Brent crude rose more than 3% to above $108 a barrel, while West Texas Intermediate (WTI) climbed above $103 a barrel. The gains came after fresh attacks in Saudi Arabia and against vessels in the Gulf region raised concerns over potential disruptions to oil production and transportation.

From a fundamental perspective, market attention remains focused on the Strait of Hormuz and Saudi Arabia’s energy infrastructure. The shutdown of Saudi Arabia’s East-West pipeline following drone attacks has reduced the country’s ability to redirect oil exports and bypass the Strait of Hormuz. At the same time, attacks involving vessels in the region have increased concerns that supply disruptions could persist, prompting traders to price in a larger geopolitical risk premium.

Supply risks have also increased around the Bab el-Mandeb Strait, where Iran-backed Houthi forces have intensified activity. With multiple strategic energy routes facing disruption, the market is increasingly concerned that the supply problem could extend beyond a temporary shock. This remains a key bullish factor for both Brent and WTI in the short term.

However, persistently high oil prices also pose risks to global demand. Brent remaining above US$100 could increase fuel, transportation, and production costs, potentially weighing on consumption if elevated prices persist. Higher energy prices could also revive inflationary pressures and make central banks, including the Federal Reserve, more cautious about cutting interest rates.

Technically, Brent is trading around $107–108 a barrel, while WTI is around $102–103. Momentum remains bullish after crude prices gained roughly 8% over the previous week. For Brent, the $108–110 area represents the nearest resistance zone. A sustained break above this area could open the way toward $115, particularly if geopolitical tensions continue to escalate. Meanwhile, $103–105 serves as an important support zone. For WTI, resistance is seen around $105, with initial support near $100–102.

For today’s session, the outlook for oil remains bullish, although volatility is expected to remain extremely high and prices will continue to react strongly to geopolitical developments. As long as disruptions around the Strait of Hormuz persist and there is no convincing diplomatic progress, buying pressure could remain elevated. Conversely, any agreement that restores shipping routes or signs of easing tensions could quickly remove part of the geopolitical risk premium and trigger profit-taking.

Overall, oil prices are currently being driven more by supply risks than demand fundamentals. Brent and WTI trading above $100 indicate that the market is pricing in a substantial premium for potential energy disruptions. In the short term, the bullish trend remains intact as long as Brent holds above $103–105. However, the longer prices remain above $100, the greater the risk of a sharp correction if positive geopolitical developments emerge.(mrv)

Source: Newsmaker.id