Oil Rallies as Trump Threatens More Strikes on Iran

The U.S. revoked a sanctions waiver that let Iran sell oil in global markets. President Trump then said the U.S. could launch additional strikes against Iran and could resume a naval blockade of Iranian ports. WTI crude and Brent oil both rallied on the escalation.

WTI tested the $74.50–$75.00 resistance zone. If it clears that level, the next target is $78.00–$78.50, the report said. Brent crude pushed toward $77.00–$77.50. A settlement above that opens the path to $81.00–$81.50. On the downside, a move below $76.00 sends Brent toward $72.00–$72.50.

The immediate catalyst was the escalation in the Strait of Hormuz, where Iran earlier attacked vessels. Trump also threatened to bomb infrastructure targets, including power and desalination plants. Iran has said it will retaliate if those plants are hit. A closure of the Strait of Hormuz would give Brent additional upside momentum, the report noted. Global oil reserves have already declined significantly during the earlier crisis in the strait.

The U.S. Energy Information Administration released its Weekly Petroleum Status Report. Crude inventories rose 3 million barrels last week, against analyst expectations of a 2.4 million barrel draw. Gasoline stocks fell 1.9 million barrels, slightly more than the 1.6 million barrel draw forecast. Distillate fuel inventories dropped 5 million barrels. Crude oil imports averaged 5.6 million barrels per day, up 351,000 bpd from the prior week. Domestic production increased to 13.86 million bpd from 13.81 million bpd. The Strategic Petroleum Reserve fell to 319.5 million barrels from 325.7 million barrels as the U.S. continued selling from reserves.

Natural gas, by contrast, stayed range-bound near the $3.20–$3.25 support level. It failed to hold above $3.35. The market lacks a strong catalyst to break out of its summer consolidation.

The oil rally has direct implications for currency pairs. The Canadian dollar, the Norwegian krone, and the Russian ruble tend to strengthen when crude climbs. That puts pressure on USD/CAD to the downside, barring a simultaneous dollar rally. The risk-off tone from the geopolitical escalation could lift the Japanese yen as a safe haven, pressuring USD/JPY. The dollar itself gained ground on the day, partly on safe-haven demand and partly on the widening rate differential, the report noted. The oil-price tailwind for commodity currencies may cap the greenback's gains against those pairs.

Traders are watching the next headline out of the White House or Tehran. If the Strait of Hormuz is disrupted again, the move in oil could accelerate, with knock-on effects for inflation expectations and central bank rate paths. For now, the resistance levels at $75 WTI and $77.50 Brent are the lines in the sand.

For more on how commodity markets connect to FX, see the forex market analysis and the dollar rally on Iran strikes.