Above $90.00: WTI edges higher as traders weigh US-Iran war outlook

• $90.15 is in sight as WTI edges up in early Asian trading on Friday.
• Tuesday’s elections delivered a Democratic sweep of the House and Senate.
• Tehran cannot act on its nuclear programme “without our approval.”, Trump says.

$90.15 is the approximate trading level for West Texas Intermediate (WTI) in Thursday’s early European session. The US crude oil benchmark is advancing as traders weigh the outlook for US-Iran relations after the US midterm elections, alongside a recovery in Middle Eastern oil supplies.

Following Wednesday’s sell-off, crude prices are extending their 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, looked much less assured. Traders are reassessing whether the US midterm results would, in practice, lead to a swift end 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.

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

Despite recovering crude shipments through the Strait of Hormuz, commercial shipping continues to face threats. Reuters reported at least five vessel incidents in the Persian Gulf since Sunday.

Oil and trade remain exposed to Trump risk as rhetoric softens

TD Securities cautions that President Trump still has considerable capacity to unsettle markets, even if recent geopolitical signals suggest a shift towards de-escalation. The bank’s 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 the possibility that renewed tensions could reconnect crude prices and interest rates.

A similar risk applies to trade policy. TD Securities notes that “Trump has significant latitude on the trade front, though markets have become less reactive to modest escalations in trade policy.” The bank nevertheless cautions that “another major Liberation Day-type move could unnerve investors,” indicating that smaller policy changes may draw a subdued reaction, while a substantial, unexpected shock could still severely disrupt risk sentiment.

100-day SMA underpins WTI’s constructive technical outlook

Above the 100-day simple moving average (SMA), WTI US Oil retains a constructive near-term bias on the daily chart. That position preserves the broader uptrend despite the recent retreat from the mid-$90s. Trading between the lower and middle Bollinger Bands points to consolidation within an established bullish structure. Meanwhile, the Relative Strength Index (14), at around 41, signals easing momentum rather than outright bearish pressure.

The Bollinger middle band at $96.75 provides the first resistance level. A stronger obstacle lies near $105.15 at the upper band, where buying interest could begin to weaken. Immediate downside support sits at the lower Bollinger band of $88.30, ahead of firmer trend support around $86.25 at the 100-day SMA. Provided these support levels hold, dips are likely to attract buying, preserving the upside bias.

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