Bab el-Mandeb Disruption Risk Pushes Oil to $86 Resistance

WTI crude formed a base during the consolidation from June 18 to July 13 and broke higher last week. The price has also broken above the descending trendline that extended from the May 19 high, Umair noted. A break above $86 would open the path toward $96, with the short-term target in the $100 to $110 range, he said. A drop below $72 would negate the bullish setup and pave the way for a move toward $60.

Brent crude bottomed at $72 support, rebounded, and closed above its 50-day moving average. The 50-day SMA remains above the 200-day SMA, a structure that typically signals bullish momentum, Umair said. Brent needs to break above $90 to continue the advance. A close above $90 could open the door to $100, and a break above $100 would target $130, he added. A drop below $81 would weaken the short-term outlook and keep the market in a consolidation zone.

The weekly charts show WTI and Brent both recovering above their 50- and 200-week SMAs, a pattern that has historically preceded sustained rallies, Umair said. The correction from earlier highs was driven by extremely overbought conditions on the weekly RSI, he said. That indicator has now normalized, leaving room for momentum to rebuild.

Oil prices remain elevated on the combination of geopolitical risk and supply disruption fears. The Houthi group has announced plans to impose a maritime blockade on Saudi Arabia, though no timeline has been given. The next move, Umair said, will depend on whether the threat materializes or is contained.

For related analysis, see Natural Gas: 207K Shorts Face Heat Test as Front-Month Holds Support.