The oil market is currently passing through a phase of extreme volatility. A combination of shockingly low US inventory data and escalating Middle Eastern tensions has propelled WTI prices by over 5% in a single session, pushing quotes toward key multi-month resistance levels. According to the latest Axios' report, Trump rejected Iran's offer, reaffirmed the blockade of the Strait of Hormuz and stated that he would consider military action if Iran does not act.
Nominally, we are seeing the largest increase since April 2, and in percentage terms, since April 21. Although current levels appear high, it's worth noting the massive downward rolling of futures (backwardation), meaning oil prices would be significantly higher without it.
Gigantic Drain on American Stockpiles
The latest EIA report provided data clearly pointing to a rapid tightening of the physical market. US crude inventories shrank by 6.23 million barrels, a crushing result compared to forecasts of a symbolic 0.23 million drop. Refined products were hit even harder:
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Gasoline: Down 6.07 million barrels (expected -2.1 million).
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Distillates: Down 4.49 million barrels (expected -2.1 million).
Such deep drainage suggests the world is desperately turning to US resources to plug supply gaps amid global turmoil. Crucially, the December contract crossed $80 for the first time, indicating the market is losing faith in a quick resolution to supply issues.
Geopolitics: Trump and the "Siege" of Iran Scenario
The primary fuel for the ongoing rally is not statistical data alone, but reports from Washington. The Donald Trump administration held talks with oil sector representatives regarding an extended blockade of the Strait of Hormuz, which leaks suggest could last for months. The vision of a multi-month "siege" of Iran, cutting off one of the world's most critical transport routes, is paralyzing the supply side. The market is now pricing a scenario where Middle Eastern oil is permanently blocked, positioning the US as a key—yet heavily strained—supplier. Brent crude recently traded up 6% at $110.73 per barrel , while US West Texas Intermediate (WTI) rose 7.15% to $106.70.
Technical Analysis: Toward the Extreme
The price of WTI is rapidly approaching a critical resistance zone located between $105 and $110.
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Bullish Scenario: Breaking the $106.80 level (the candle close from early March) will clear the path toward this year’s highs around $117–$119. Momentum is with the buyers, and the uptrend—supported by the 100-hour moving average—remains intact. Furthermore, the 50-period average was only breached momentarily.
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Bearish Scenario: A supply reaction in the current zone could lead to a downward rotation, with initial targets at the $98–$100 levels.
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