Oil Surges 7% on Iran Attack; Strait of Hormuz Risk Returns

Higher crude prices feed into gasoline costs, lifting near-term inflation expectations. That complicates the Federal Reserve’s rate path and supports the dollar. The forex correlation matrix shows the dollar tends to strengthen on oil shocks as energy import costs rise. The dollar had already held above JPY 160 after the BOJ hike; the oil spike adds further upward pressure.

The EIA report added a bullish fundamental layer. U.S. crude inventories fell 7.2 million barrels last week, far more than the 1.3 million analysts had forecast. Gasoline inventories were unchanged, versus expectations for a 0.7 million barrel decline. The Strategic Petroleum Reserve dropped to 307.7 million barrels, multi-decade lows. The drawdown from 311.4 million barrels in a single week underscores how much the U.S. has sold from emergency stocks.

Natural gas rebounded as traders rotated into the September front-month contract. Resistance sits at $2.75–2.80 per MMBtu, then $3.00–3.05. Support is at $2.50–2.55. The broader geopolitical tension supports energy commodities across the board.

WTI oil faces immediate resistance at $85.50–86.00. A clean break there opens a run toward $90.50–91.00. For Brent, the $90.50–91.00 level is the first test; clearing it targets $95.50–96.00. The technical path hinges on whether the Middle East conflict escalates or stabilizes, traders said.