Oil climbs as Hormuz talks delayed and Saudi pipeline closure worsens supply fears

FUNDAMENTAL OVERVIEW

Oil prices are gaining ground again at the start of the week as the supply outlook darkened further. Saudi Arabia shut its East-West pipeline after drone strikes, a key route that has served as an alternative to the Strait of Hormuz, carrying roughly 4-5 million barrels per day to the Red Sea in recent months. With that link now offline, one of the few remaining ways to move Saudi crude without passing through Hormuz has been removed, while the strait itself remains heavily disrupted.

In addition, the postponement of discussions between Iran and Gulf states about a possible temporary shipping arrangement through the Strait of Hormuz put further pressure on sentiment. Hopes for a quick easing of tensions faded as a result.

The fundamental backdrop stays supportive for oil and unfavorable for most other markets, with inflation concerns still elevated. Hormuz disruption, the loss of Saudi Arabia's main bypass pipeline, and mounting risks around the Red Sea and Bab el-Mandeb strait leave the market with fewer options to make up for lost or delayed barrels. Tanker rates have also climbed as shipping becomes more difficult and expensive.

Oil prices are likely to stay supported and push toward new highs unless progress emerges in US-Iran relations or toward reopening the Strait of Hormuz. On the other hand, more attacks on energy infrastructure or shipping would keep the upside risk firmly in place.

CRUDE OIL TECHNICAL ANALYSIS – DAILY TIMEFRAME

On the daily chart, crude oil is approaching the key resistance zone near 105.00 once more. Sellers are expected to step in there with a defined risk above the resistance, aiming for a drop toward the lower channel boundary around 85.00. Buyers, however, will want to see a break higher to boost bullish bets toward the 111.00 handle next.

CRUDE OIL TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

On the 4-hour chart, an upward trendline is marking the bullish momentum leading into the resistance. Should a pullback occur, buyers are likely to lean on the trendline with a defined risk below it to keep pushing toward new highs. Sellers, in contrast, will look for a break lower to add bearish bets into the lower channel bound.

CRUDE OIL TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

On the 1-hour chart, another minor upward trendline defines the bullish momentum on this timeframe. If a pullback brings the price back to the trendline to close the weekend gap, buyers are expected to step in with a defined risk below the trendline and continue targeting new highs. Sellers will watch for a break to extend the pullback toward the 4-hour trendline next. The red lines mark the average daily range for today.

UPCOMING CATALYSTS

On Wednesday, the FOMC rate decision is due. On Thursday, US Jobless Claims data will be released. Traders will also remain focused on developments in the Middle East.