WTI edges higher above $90.00, with traders weighing the outlook for the US-Iran war

• WTI posts modest gains, approaching $90.15 in early Asian trading on Friday.
• Tuesday’s elections delivered a Democratic sweep of both the House and Senate.
• On Tehran’s nuclear programme, Trump says it cannot act “without our approval.”

Buying interest is lifting West Texas Intermediate (WTI), the US crude oil benchmark, which trades around $90.15 in Thursday’s early European session. Traders are weighing the implications of the US midterm elections for US-Iran relations alongside a recovery in Middle Eastern oil supplies.

Following Wednesday’s sell-off, crude oil is continuing its rebound. A Democratic sweep of the House and Senate in Tuesday’s midterm elections fuelled speculation that US President Donald Trump would come under pressure to bring the eight-month conflict with Iran to an end.

A rapid resolution, however, appeared far less assured. Traders are reassessing whether the US midterm outcome would, in fact, lead to a swift conclusion to the Iran war.

Rebecca Babin, senior energy trader at CIBC, said the sell-off “could be getting a bit overdone,” adding: “The market is in a shoot first, ask questions later mode as emotions run high after the unexpected election results,”

Military escalation in the region remains the more likely outcome, according to Bob McNally, president of Rapidan Energy and a former adviser to President George W. Bush.

Speaking on Thursday, Trump said US “approval” was required for anything Iran does concerning its nuclear programme. He also said: “We need to decide whether to go further or certify it.”

Despite a rebound in crude shipments through the Strait of Hormuz, threats to commercial shipping remain. Reuters reported at least five incidents involving vessels in the Persian Gulf since Sunday.

Could Trump still unsettle oil and trade despite softer rhetoric?

Markets remain exposed to President Trump’s capacity to cause disruption, TD Securities cautions, even though recent geopolitical signals may indicate a shift towards de-escalation. The bank’s geopolitical assessment is that “recent rhetoric appears to point toward de-escalation, but Trump could pursue escalation against Iran, which could send oil prices sharply higher.” It also observes that “the rates-oil correlation has reversed in recent weeks but could resume if oil prices spike sharply,” highlighting how renewed tensions could restore the link between crude prices and interest rates.

Turning to trade, TD Securities notes that “Trump has significant latitude on the trade front, though markets have become less reactive to modest escalations in trade policy.” Its warning that “another major Liberation Day-type move could unnerve investors,” nevertheless indicates that a sizeable, unforeseen shock could still seriously disrupt risk sentiment, even as smaller policy changes draw a more restrained market response.

Technical Analysis: Can WTI retain its positive bias above the 100-day SMA?

WTI US Oil’s daily chart continues to favour a constructive near-term view, with prices holding above the 100-day simple moving average (SMA). That position preserves the wider uptrend despite the recent retreat from the mid-$90s. Trading between the lower and middle Bollinger Bands points to consolidation within an existing bullish structure. Meanwhile, the Relative Strength Index (14), at around 41, signals easing momentum rather than clear bearish pressure.

The Bollinger middle band at $96.75 marks the first upside hurdle. Beyond it, the upper band near $105.15 presents a more substantial resistance level, where buying interest could weaken. The lower Bollinger band at $88.30 provides immediate downside support, ahead of firmer trend support around $86.25 at the 100-day SMA. Provided these support levels remain intact, buying is likely to absorb declines, preserving the upward bias.

(The technical analysis of this story was written with the help of an AI tool. Know more.)