Oil Prices Tick Up as Saudi Arabia Halts Crude Deliveries After Pipeline Closure

FUNDAMENTAL OVERVIEW

Oil prices were easing in early trading as some investors locked in profits, but those declines were swiftly reversed once Saudi Arabia notified several European refiners that their crude shipments for September had been scrapped in the wake of the East-West pipeline shutdown.

To recap, Saudi Arabia halted operations on its East-West pipeline following drone strikes. This pipeline, which has served as an alternative to the Strait of Hormuz, has been moving around 4-5 million barrels each day to the Red Sea in recent times. Its closure wiped out one of the few remaining conduits for Saudi crude exports while shipping through Hormuz stays hampered.

The fundamental picture continues to support oil prices, and that is likely to persist unless there is a real thaw in US-Iran ties or a workable plan to reopen the Strait of Hormuz. The only other route to lower prices would be an aggressive Fed rate hike cycle that curbs demand and triggers a downturn.

CRUDE OIL TECHNICAL ANALYSIS – DAILY TIMEFRAME

Looking at the daily chart, crude oil pushed above the key resistance near the 105.00 mark but failed to hold a breakout. Sellers are expected to keep stepping in with a defined risk above that level, aiming for a decline toward the channel's lower boundary around 85.00. Buyers, meanwhile, are watching for a decisive move higher to fuel bullish bets toward the 111.00 handle next.

CRUDE OIL TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

On the 4-hour chart, an upward trendline is underpinning the bullish momentum. If a pullback occurs, buyers are likely to defend the trendline with a defined risk below it, pushing for fresh highs. Sellers, on the other hand, will be looking for a downside break to ramp up bearish positions toward the channel's lower bound.

CRUDE OIL TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

On the 1-hour chart, a minor upward trendline is guiding the recent price action near the resistance zone. With the supportive fundamental backdrop, buyers are likely to keep seeking buying opportunities on dips around the trendlines. Sellers, conversely, will watch for breaks to add to short positions and target new lows. The red lines mark the average daily range for today.

UPCOMING CATALYSTS

Later today, the FOMC rate decision is due. Tomorrow brings the US Jobless Claims data. Traders are also keeping a close watch on Middle East developments.