FX.co ★ Wiking | CL/Crude Oil

WTI futures traded little lower at around $87.00 per barrel during the European market hours on Friday. The recent decline was close to its three-week high of $87.38 seen on Thursday. Oil prices remain strong. Global energy supply is under pressure due to blockades of the Strait of Hormuz and the Bab el-Mandeb Strait. Both of which together account for 27% of global energy supplies. There does not appear to be any chance of energy prices dropping in the short run. However, the failure of the US and Iran to engage in any dialogue concerning the opening of the Strait of Hormuz. In addition, tensions between the US and Iran will continue to rise. President Donald Trump has threatened sanctions against Iran, including isolating it in the international finance sector. The analysts at Danske Bank have noted that the US language toward Iran has become tougher in recent times. President Trump said that "severe consequences" will follow for nations that have any business or financial relations with Iran. The Treasury Secretary, Mr. Scott Bessent, added that they would impose the toughest sanctions ever. Danske Bank reports that Bessent stated that a more aggressive sanctions approach may actually lower the chances of a "renewed large-scale military escalation. Oil markets are misinterpreting the signals and may be overestimating the risk of another geopolitical crisis. Based on the daily chart, US Oil is currently trading at $87.00. The black gold is in a short-term bullish technical bias. The price level is above the 20-period exponential moving average at $82.03. Price trading above the 20-period Exponential Moving Average shows that demand is prevailing. The Relative Strength Index (14), currently at 58.54, is in positive territory without indicating overbought conditions, suggesting that there could be more upside ahead. From a negative perspective, near-term resistance is seen at the 20 EMA at $82.03, and a breakdown below would suggest a correction. While WTI holds above the $82.03 region, the technical outlook remains positive with a risk of ranging action. However, a break lower from this level will undermine the positive construction on the charts. Looking up, oil prices could continue to push higher towards their two-month high of $92.25.