Oil prices rise as US strikes on Iran oil sites, but no runaway rally yet

Oil prices surged as escalating tensions in the Middle East have raised fears of supply disruptions. US President Joe Biden confirmed that he is considering airstrikes on Iran’s oil facilities in retaliation for Tehran’s missile attack on Israel. The growing conflict, already being described as the most severe in the region since the Gulf War, has fueled a sharp rise in oil prices throughout the week. However, the rally has yet to become “runaway”, largely due to OPEC+ holding significant spare capacity, which could be deployed to stabilize the market if needed.

Technically, while WTI’s breach of 55 D EMA is a near term bullish sign, the upside is so far capped by 10% projection of 65.63 to 73.23 from 66.97 at 74.57. Rebound from 65.63 is still seen as a corrective recovery for now. Break of 70.47 minor support will argue that the recovery has completed, and the larger down trend is ready to resume through 65.63 low.

However, decisive break of 74.57 could prompt upside acceleration through key fibonacci level at 38.2% retracement of 95.50 (2023 high) to 65.63 at 77.04. In this case, WTI could be reversing the whole fall from 95.50 and target 61.8% retracement at 84.08.