Kuwait Crude Output Surges, Oil Prices Likely to Remain Range-Bound

Summary:

Kuwait's crude oil production climbed to its highest level since the outbreak of the Iran conflict in July, signaling a gradual recovery in Middle Eastern oil supply. With the outlook for U.S.-Iran relations still uncertain, geopolitical risk premiums remain relatively limited. WTI crude is expected to trade within the $70-$90 per barrel range in the near term.

SELL WTI

EXP

TRADING

76.726

Entry Price

67.000

86.000

75.166 -3.538 -4.50%

0.0

Pips

Flat

67.000

Exit Price

76.726

Entry Price

86.000

Fundamentals

According to data provided by government officials, Kuwait's crude oil production increased sharply in July, rising by nearly 300,000 barrels per day (bpd) from June to an average of 1.97 million bpd, the highest level since the Iran conflict began. However, sources familiar with the matter did not disclose the specific reasons behind the production increase. Current output has recovered significantly from April's lows but remains approximately 20% below pre-conflict levels.

Meanwhile, crude exports from the Persian Gulf have also shown signs of improvement. Gulf producers have made progress in restoring oil shipments through the Strait of Hormuz in recent weeks. Although regional shipping security came under renewed pressure following the collapse of the U.S.-Iran ceasefire agreement, negotiations aimed at restoring normal tanker traffic are ongoing, easing market concerns over potential supply disruptions.

On the demand side, persistently high summer temperatures have boosted electricity consumption across the Middle East, increasing domestic demand for crude oil used in power generation. Following the U.S.-Iran ceasefire reached in June, the CEO of Kuwait Oil Company stated that all force majeure declarations would be lifted immediately and projected that crude production would quickly recover to around 2.0 million bpd.

Market Outlook: Geopolitical risk premiums in the oil market remain relatively modest. Unless the United States and Iran reach a new nuclear agreement or the Middle East experiences a significant military escalation, WTI crude is expected to remain within the $70-$90 per barrel trading range. This suggests that investors have yet to aggressively reprice supply risks and continue to adopt a cautious wait-and-see approach.

Kuwait Crude Output Surges, Oil Prices Likely to Remain Range-Bound_1

Technical Analysis

WTI crude has decisively broken below the lower boundary of the descending wedge formed between late July and early August and has also fallen beneath the key neckline support at $77.20, indicating that the previous rebound has likely ended and that sellers have regained control of the market.

From a trend perspective, the 100-day moving average remains below the 200-day moving average, confirming that the medium- to long-term bearish structure remains intact. Although recent price action has narrowed the gap between the two moving averages as crude attempts to recover part of its recent losses, the broader trend continues to favor the downside.

Momentum indicators also remain bearish. The Stochastic Oscillator continues to decline and is approaching oversold territory, suggesting that bearish momentum is still dominant. While an oversold reading could trigger a short-term technical rebound, any recovery is likely to be limited and insufficient to reverse the prevailing downtrend.

Overall, as the market gradually unwinds the geopolitical risk premium accumulated during the latest Middle East conflict, oil prices are returning to fundamentals-driven pricing. At the same time, Iran has denied the existence of any so-called "Hormuz Agreement" mentioned by U.S. President Donald Trump, underscoring that regional uncertainty remains elevated. Until a new and meaningful geopolitical catalyst emerges, WTI crude is expected to maintain a bearish bias within a broad trading range, with rallies likely providing opportunities for renewed short positioning.

Trading Strategy

Direction: Sell

Entry Price: 79.00

Target Price: 67.00

Stop Loss: 86.00

Valid Until: September 3, 2026, 23:55

Support: 77.25, 74.98, 72.81

Resistance: 79.68, 81.00, 85.12

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