Crude oil bulls remain in the driving seat

Crude oil prices have been in a strong uptrend over the past several days and weeks. Heightened tensions between the US and Iran have pushed global crude oil prices to fresh multi-month highs, raising concerns about increased inflationary pressure on the recovering economy.

Oil prices maintained a bullish tone throughout last week and faced additional buying pressure early this week amid escalating geopolitical tensions in the Middle East. On Tuesday, Brent crude approached $111 per barrel, while West Texas Intermediate (WTI) traded steadily above $115. However, both benchmarks appear to lack momentum as investors grew cautious about placing aggressive bids ahead of President Donald Trump’s deadline.

Crude oil and geopolitics

The bullish momentum surged early Tuesday as President Trump’s deadline for threatened attacks on Tehran’s infrastructure approached, following Iran’s rejection of a proposed 45-day ceasefire. Iran insists on a permanent end to the conflict with guarantees against future strikes and counters with its own 10-point demands. Trump called Iran’s response “not good enough” and reiterated threats to strike infrastructure if the Strait of Hormuz is not reopened by his deadline.

Meanwhile, commodity markets face uncertainty over the pace of future Federal Reserve rate cuts, as rising oil prices fuel near-term inflation concerns among global investors. Attention now turns to the release of crucial US inflation data this week, with traders hoping these figures will provide clues about the Federal Reserve’s monetary policy path.

In Summary

Crude oil prices are expected to remain highly volatile this week, sensitive to incremental updates regarding the Middle East situation. WTI crude is trading near its March highs, with technical indicators suggesting the uptrend remains intact and may continue higher if prices break above recent peaks. However, failure to break out after multiple attempts could signal weakening upside momentum. Looking ahead, updates on Trump’s Iran policy, geopolitical developments, US CPI data, and Fed policymakers’ comments will be key factors influencing short-term oil price movements.

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