Oil Prices Are Driven by Demand, Not Promises

Summary:

International oil prices extended their gains on Tuesday, with WTI crude rising for a fourth consecutive trading session. Current price action is being driven more by actual supply-demand dynamics and changes in geopolitical risks than by diplomatic promises. As progress in US-Iran negotiations slows and uncertainty remains over the restoration of normal shipping through the Strait of Hormuz, oil prices continue to receive short-term support. However, overbought technical conditions and key resistance levels suggest that the current rebound faces a significant risk of correction.

SELL WTI

EXP

TRADING

80.367

Entry Price

65.890

86.600

82.037 +0.625 +0.77%

0.0

Pips

Flat

65.890

Exit Price

80.367

Entry Price

86.600

Fundamentals

WTI crude prices rose for a fourth consecutive trading session as both the United States and Iran adopted increasingly stringent negotiating positions, slowing progress toward restoring normal shipping through the Strait of Hormuz and easing regional tensions.

Persistent tensions in the Middle East could once again disrupt global energy supplies and exert further pressure on consumer prices. Previously, some Federal Reserve officials had expected the federal funds rate to remain unchanged and believed the current conflict could be resolved relatively quickly. However, as negotiating demands continue to escalate, developments on the ground have increasingly diverged from those earlier expectations.

Iran has demanded economic compensation, the withdrawal of US forces from the region, the lifting of sanctions, and the return of frozen assets. Meanwhile, the United States has also put forward a series of stringent conditions. With both sides continuing to introduce new demands while showing limited willingness to take concrete action or compromise, market expectations for a rapid restoration of normal shipping through the Strait of Hormuz have weakened further.

This suggests that the crude oil market may continue to maintain a relatively high geopolitical risk premium in the short term. As long as uncertainty on the supply side does not ease significantly, oil prices are likely to remain under upward pressure. However, if the conflict does not escalate further and actual crude oil supplies are not subject to prolonged disruption, the current geopolitical risk premium could also unwind rapidly.

Oil Prices Are Driven by Demand, Not Promises_1

Technical Analysis

From a technical perspective, WTI crude has recently broken above a long-term descending trendline during its rebound, but prices remain capped by a key resistance zone around $85.00.

Since reaching a short-term low in early August, WTI has gradually formed a small rising wedge pattern. Although the short-term trend remains bullish, the rebound is increasingly being tested as prices approach the upper boundary of the wedge and previous key resistance levels. At the same time, resistance above the market remains relatively dense, limiting the room for further gains.

From an indicator perspective, the Stochastic Oscillator has moved deep into overbought territory, reflecting strong buying momentum in recent sessions. However, this also indicates that short-term profit-taking pressure is building, increasing the probability of a technical pullback. The Relative Strength Index (RSI) is also trending higher and approaching overbought territory, confirming that bulls remain in control while also suggesting that the market has entered a relatively elevated price zone.

Therefore, given the absence of a sustained supply disruption on the fundamental side and the fact that the medium-term technical structure has not fully escaped its broader downtrend, the current rise in oil prices is better viewed as a short-term corrective rebound rather than a medium-term trend reversal.

If WTI can break decisively above $85.30 and subsequently hold above the long-term descending trendline as well as the resistance zone near $87.00, the medium-term technical structure could see a meaningful improvement. Conversely, if prices fail to break above $85.30 and subsequently fall back below key support levels, the current rebound could gradually lose momentum, leaving WTI vulnerable to a retest of its previous lows.

Trading Strategy

Direction: Sell

Entry: 82.50

Target: 65.89

Stop Loss: 86.60

Strategy Valid Until: September 10, 2026, 23:55

Support: 78.78, 78.85, 75.63

Resistance: 83.55, 85.29, 87.89

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