Crude Oil Enters a Five-Wave Rally Within the Range, Middle East Risk Premium May Drive Prices Higher

Summary:

Driven by escalating geopolitical tensions in the Middle East, concerns over potential disruptions to crude oil supplies have intensified, pushing WTI crude oil futures higher for several consecutive sessions. As tensions between the United States and Iran continue to escalate and supply risks surrounding the Strait of Hormuz resurface, the risk premium in energy markets has risen significantly. Both fundamental factors and technical structures suggest that the recent pullback in crude oil prices may represent a normal correction within an ongoing uptrend. As long as key support levels remain intact, WTI is expected to extend its five-wave rally structure within the trading range and potentially challenge the target area near $92.00.

BUY WTI

EXP

TRADING

79.722

Entry Price

92.000

63.800

82.064 -0.169 -0.21%

0.0

Pips

Flat

63.800

Exit Price

79.722

Entry Price

92.000

Fundamental

Last week, renewed tensions between the United States and Iran shifted market focus back toward the risk of disruptions to Middle Eastern crude oil supplies, accelerating gains in WTI prices. As the U.S. expanded military operations against Iranian targets and Iran launched retaliatory actions against neighboring Gulf countries, concerns over the potential spillover of regional conflicts intensified, helping WTI crude oil surge more than 10% during the week.

In addition, the possibility of renewed action by Yemen’s Houthi movement and potential threats to Red Sea shipping routes have further strengthened expectations of supply-side risks. With transportation through the Strait of Hormuz facing restrictions, Saudi Arabia has redirected part of its crude oil export routes toward the Red Sea, making regional shipping security a key focus for energy markets.

Global crude oil inventories remain at relatively low levels compared with recent years, while the impact of previous strategic petroleum reserve releases by major economies is gradually fading. Against this backdrop, renewed risks surrounding the Strait of Hormuz — one of the world’s most critical energy transit points — could pose significant challenges to future crude oil supply.

The market currently appears relatively cautious in pricing potential supply disruptions, and investors may be underestimating the impact of declining inventories and transportation constraints on oil prices.

Meanwhile, limited progress in recent diplomatic negotiations has increased concerns that the conflict could persist for an extended period. However, after the sharp short-term rally, technical indicators showed signs of overbought conditions, leading WTI crude oil to experience profit-taking on Monday. From a trading perspective, the current pullback may present an opportunity to rebuild long positions.

Crude Oil Enters a Five-Wave Rally Within the Range, Middle East Risk Premium May Drive Prices Higher_1

Technical Analysis

WTI crude oil prices surged to a high near $85.07 on Monday before experiencing a technical pullback. The price is currently testing support from the previous breakout area while approaching the short-term rising trendline support zone.

If the current correction successfully holds above key support levels, it could attract fresh buying interest and help the market complete the five-wave rally structure within the trading range.

Based on Fibonacci retracement levels drawn from the recent low to the high, potential buying zones are concentrated around the following areas:

38.2% Fibonacci retracement: Around $82.00

This level is close to the current consolidation zone and represents the first key defensive area for short-term bulls.

50% Fibonacci retracement: Around $80.50

If the correction extends further, this area may become a more attractive level for medium-term positioning.

61.8% Fibonacci retracement: Around $79.00

This zone is near the upper boundary of the previous consolidation range and represents a relatively strong support area.

If WTI declines further toward $77.42, the current bullish structure would face increasing pressure. A decisive break below $75.77 would invalidate the current five-wave rally structure, potentially pushing the market back into a broader consolidation phase.

Overall, as long as crude oil prices remain above $77.42, the current bullish trend structure remains intact.

Trading Strategy

Direction: Buy

Entry Price: 79.20

Target Price: 92.00

Stop Loss: 63.80

Valid Until: August 19, 2026, 23:55

Support Levels:82.00、80.50、79.18

Resistance Levels:85.07、85.71、87.77

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