Geopolitical Risk Premium Returns to More Rational Levels, Oil Prices Likely to Maintain a Constructive Trading Bias in H2

Summary:

As tensions in the Middle East shift from the risk of a full-scale conflict to localized confrontations, the extreme geopolitical risk premium embedded in crude oil prices is gradually fading. However, underlying supply-demand fundamentals remain broadly supportive. With OPEC+ continuing to actively manage prices, global demand showing resilience, and geopolitical tail risks still lingering, WTI crude is expected to trade within a wide range during the second half of the year, facing resistance at higher levels while finding solid support on dips. The medium-term price trend is likely to remain upward, with WTI expected to hold above $85.00 per barrel.

BUY WTI

EXP

TRADING

79.697

Entry Price

95.800

63.800

78.867 -0.837 -1.05%

0.0

Pips

Flat

63.800

Exit Price

79.697

Entry Price

95.800

Fundamentals

The global crude oil market experienced significant volatility during the first half of the year, largely driven by geopolitical developments. As tensions in the Middle East escalated, fears of a disruption to shipping through the Strait of Hormuz pushed international crude prices sharply higher, briefly approaching $120 per barrel. However, as diplomatic efforts intensified and major economies worked to contain the conflict, concerns over severe supply disruptions eased considerably, triggering a rapid correction in oil prices.

Although tensions around the Strait of Hormuz have resurfaced recently, market reactions have become noticeably more measured. Investors increasingly recognize that the probability of a complete closure of the world's most critical energy shipping route remains relatively low. As a result, the market's pricing mechanism is shifting from extreme geopolitical scenarios toward a more balanced assessment of geopolitical tail risks.

Meanwhile, political intervention has once again become an important market driver. The U.S. government remains highly sensitive to the impact of energy prices on domestic inflation and economic growth, leaving open the possibility of measures such as strategic petroleum reserve releases or diplomatic initiatives to prevent excessive price spikes. At the same time, OPEC+ continues to manage supply flexibly in an effort to stabilize the market, underscoring its commitment to maintaining price stability.

On the demand side, although global economic growth has moderated, the U.S. economy remains relatively resilient while energy consumption across Asia continues to provide solid support. The International Energy Agency (IEA) still expects global oil demand to expand further. Although the market is not facing an outright supply shortage, relatively low inventory levels should continue to limit the downside for crude prices.

Overall, the key drivers of the oil market in the second half of the year are likely to be the interaction between geopolitical tail risks, government intervention, and supply-demand rebalancing. Against this backdrop, oil prices are unlikely to replicate the sharp one-way rally seen during the first half of the year, but they also appear to lack the fundamental conditions for a sustained bearish trend.

Geopolitical Risk Premium Returns to More Rational Levels, Oil Prices Likely to Maintain a Constructive Trading Bias in H2_1

Technical Analysis

From a longer-term perspective, WTI crude has stabilized following its sharp correction, while the medium- to long-term uptrend remains intact. On the weekly chart, prices continue to trade above the major moving averages, and the long-term ascending trendline remains unbroken, suggesting that the market is still undergoing a healthy consolidation within a broader bullish cycle.

On the daily chart, the area below $70.00 has gradually emerged as an important medium-term support zone. Over recent sessions, repeated pullbacks toward this region have attracted strong buying interest, indicating that investors are gradually establishing a new value base. Meanwhile, the 20-day and 50-day moving averages have begun to slope higher, signaling that the medium-term bullish structure is rebuilding.

Momentum indicators also support a constructive outlook. The Relative Strength Index (RSI) is currently holding around the neutral 50 level, suggesting that market sentiment has normalized after previously reaching overly bullish conditions, while remaining comfortably above bearish territory. Meanwhile, the MACD has started to converge, and a renewed bullish crossover would likely signal the beginning of another upward leg.

On the upside, the $90.00-$92.00 area remains the key short-term resistance zone. A decisive breakout above this range could pave the way for a move toward $95.00-$100.00, with the possibility of retesting this year's highs. On the downside, $70.00 and $64.00 represent the key risk-management levels. As long as these support zones remain intact, the medium- to long-term bullish outlook is expected to remain unchanged.

Overall, WTI crude is likely to enter a phase of broad but constructive consolidation during the second half of the year. With geopolitical risks still present, global inventories remaining relatively tight, and OPEC+ continuing its active price management strategy, the market's price floor is expected to gradually rise. WTI is projected to trade within an $85.00-$100.00 range over the medium term and maintain a gradual upward bias in the coming months.

Trading Recommendation

Direction: Buy

Entry: 78.50

Target: 95.80

Stop Loss: 63.80

Valid Until: August 15, 2026, 23:55

Support: 76.00, 74.82, 72.54

Resistance: 80.57, 85.53, 89.68

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