The WTI crude oil price continued its strong bull run on Monday as the war in Iran continued, pushing more countries to reduce production and shipments. It jumped to a high of $119, the highest level in over 2 years and has more than doubled from the lowest level this year.
More Oil Countries Slash Production
The West Texas Intermediate (WTI), which is the American benchmark, continued its strong rally as more countries reduced their oil supply because of the ongoing war in Iran.
Iraq has reduced its oil supply by about 60% and is now pumping between 1.7 million and 1.8 million barrels per day, down from 4.3 million before the conflict started.
Iran’s production has largely stalled during the war, while the United Arab Emirates (UAE) and Kuwait announced that they would reduce their supply, which is notable as these countries pump millions of barrels a day. Countries like Saudi Arabia and Qatar are also cutting production.
The US, Canada, and Russia are expected to boost their production to take advantage of the ongoing price surge as they are largely not affected by the crisis in the Middle East. India has already started buying Russian oil after the Trump administration gave it a waiver last week.
Crude oil prices will likely continue rising as long as the war in the country is going on. Iran believes that shutting the Strait of Hormuz and pushing oil prices higher is a low-hanging fruit to punish the United States, especially as this is an election year.
It also continued to target oil infrastructure in the Middle East, even after officials said the country would stop targeting neighboring countries.
A possible scenario is where the US decides to release some oil from its strategic reserves to reduce prices. However, history shows that releasing these reserves does not have an immediate impact on prices.
WTI Crude Oil Price Technical Analysis
The weekly chart shows that the WTI crude oil price has been in a strong rally during the war in Iran. It has already crossed the descending trendline that links the highest swings since September 2023.
At the same time, the two lines of the Percentage Price Oscillator (PPO) have made a bullish crossover pattern, while the Relative Strength Index (RSI) has surged to the highest level since 2022.
Therefore, WTI crude oil will continue rising in the coming days as the odds of a ceasefire have continued falling on Polymarket.