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No Progress on the Strait of Hormuz Reopening Agreement, Oil Prices Rebound in the Short Term but the Downtrend Remains Intact
Summary:
Negotiations between Iran and Oman on reopening the Strait of Hormuz have yet to make substantial progress. Meanwhile, the Houthi group claimed to have attacked a Saudi refinery facility near the Red Sea, heightening concerns over potential supply disruptions. As a result, WTI crude oil extended its rebound on Monday. However, with prices gradually approaching key trend resistance, the technical outlook remains bearish on the medium term, leaving the short-term rebound vulnerable to a corrective pullback.
Sell
TradingWTI
EXP
79.759
Entry Price
65.890
TP
85.000
SL
83.029 +0.843 +1.03%
0
Point
Flat
65.890
TP
CLOSING
79.759
Entry Price
85.000
SL
Fundamental
Iran and Oman failed to reach an agreement over the reopening of the Strait of Hormuz over the weekend, dampening expectations for a normalization of Middle Eastern crude oil supplies. At the same time, the Houthi group claimed responsibility for an attack on a Saudi refinery facility near the Red Sea, further intensifying concerns over regional supply security.
Against this backdrop, international oil prices extended their gains on Monday. Both major crude benchmarks briefly rose by nearly 3%, with Brent crude reaching around $84 per barrel at its highest point, while WTI crude climbed as high as approximately $78.50 per barrel.
From a market-pricing perspective, the key factor currently supporting oil prices is not certainty that the situation will normalize, but rather the continued risk of supply disruptions. As long as the market continues to price in the possibility of prolonged disruptions to shipping through the Strait of Hormuz and further disturbances to the Middle Eastern supply chain, crude oil prices are likely to retain some geopolitical risk premium.
However, it is important to note that whether this risk premium can drive oil prices sustainably higher will ultimately depend on whether actual oil supplies face prolonged disruption. If shipping through the Strait of Hormuz resumes and physical crude oil flows gradually return to normal, the geopolitical premium accumulated in the market could unwind rapidly.
Therefore, until actual oil transportation returns to normal, geopolitical risks may continue to provide support for crude prices. However, if supply disruptions do not escalate further, the current rebound is more likely to represent a temporary recovery within the broader downtrend rather than the beginning of a sustained trend reversal.
Technical Analysis
From a technical perspective, the recent rebound in WTI crude has gradually approached the long-term descending trendline, while prices remain capped below the key resistance area around $81.00 per barrel.
Since the early-August low, WTI has gradually formed a small rising wedge pattern. Although prices have maintained their short-term recovery, momentum is increasingly being tested as the market approaches the upper boundary of the wedge and the long-term descending trendline. If prices fail to break decisively above this resistance zone, the risk of a downside breakout from the rising wedge will increase, potentially signaling a resumption of the broader medium-term downtrend.
The moving-average structure also remains bearish. The 100-period moving average is still below the 200-period moving average, indicating that the medium-term trend remains tilted to the downside. At the same time, prices have struggled to reclaim both moving averages from below on a sustained basis, meaning these indicators could continue to act as dynamic resistance and limit further upside attempts.
In terms of momentum indicators, the Stochastic Oscillator has moved back into overbought territory, suggesting that the short-term rebound may be losing momentum. Once prices begin to retreat, the overbought condition could reinforce profit-taking and technical selling pressure.
Although the Relative Strength Index (RSI) has not yet reached overbought territory, it has recently started to flatten, suggesting that bullish momentum may be weakening. If the descending trendline continues to cap prices and WTI breaks below the lower boundary of the rising wedge, the market could enter another accelerated decline.
Therefore, given the lack of evidence of a sustained supply disruption and the fact that the technical structure remains bearish, the current rebound is better viewed as a temporary recovery rather than a trend reversal. Unless WTI decisively breaks above $81.00 and establishes a firm foothold above the key descending trendline, the medium-term bearish structure remains intact.
Trading Strategy
Direction: Sell
Entry: 80.30
Target: 65.89
Stop Loss: 85.00
Strategy Valid Until: September 3, 2026, 23:55
Support: 77.04, 75.72, 73.50
Resistance: 79.57, 80.69, 80.94
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