WTI Reclaims $91 as Mideast Tensions Keep Oil Bid

WTI Bounce and the Iran Risk Premium

West Texas Intermediate crude rebounded from a three-week low on Tuesday, reclaiming the $91.00 level as traders repriced the probability of supply disruptions stemming from ongoing Middle East tensions. The rally snapped a brief selloff that had been driven by demand-side fatigue–rising US inventories and weaker Chinese import data had pushed oil toward $88.50. The bounce is not a fundamental shift in supply-demand math. It is a repricing of geopolitical risk after the IRGC warned of a decisive response to recent escalations.

The move aligns with a broader repricing of risk across asset classes. The US Dollar Index jumped 0.25% after the initial retaliation news, and the dollar-denominated commodity had to overcome a stronger greenback to mount the rally. Oil's ability to reclaim $91 despite a firmer dollar suggests the geopolitical premium is the dominant driver. The foreign exchange market has already accounted for this: the risk premium in currencies tied to the Middle East has widened. For context, GBP/USD sank toward 1.3400 on similar headlines, and the Dollar Index logged its sharpest daily gain in two weeks.

Why $91 Matters for Positioning

The $91 level carried technical significance beyond round-number psychology. It had served as support in early March before the three-week slide broke it. The breach triggered stop-losses from trend-following Commodity Trading Advisors (CTAs) that had built short positions below $90. The rebound forces those shorts to cover, accelerating the move higher. Open interest in WTI futures fell by roughly 4% on the session, consistent with a short-covering rally rather than fresh long accumulation.

For traders building a watchlist, the question is whether $91 can flip from resistance back to support. A close above $91.50 would confirm the bounce has room to test the $93 resistance level from mid-March. Failure to hold $90 would invalidate the setup and signal that demand fears are reasserting dominance.

Next Catalyst: Iran Response or Diplomatic Off-Ramp

The next decision point hinges on whether the verbal escalation from the IRGC becomes kinetic. A direct military confrontation–a missile strike on a US asset, a blockade of the Strait of Hormuz, or a targeted attack on Saudi infrastructure–would likely push WTI above $95 as the risk premium expands by $4–$5 per barrel. Conversely, a diplomatic off-ramp, such as a renewed cease-fire in Gaza or a US-Iran backchannel deal, would deflate the premium rapidly. In that scenario, WTI could slide back toward $88 within two to three sessions.

Traders should monitor headlines from Tehran and Washington with a granular lens. A coordinated statement from the IAEA or a joint European mediation effort would be the clearest signal of de-escalation. Barring that, the oil market will remain sensitive to every proxy report from the region. The current price embeds a medium-probability assumption of disruption–neither a panic bid nor a complacent discount. The next concrete move will come when that assumption is tested by action, not words.

For more on the intermarket effects of geopolitical risk, see our analysis of the IRGC Warns of Decisive Response, Forex Risk Premium Rises and the Dollar Index Jumps 0.25% After Iran Retaliation. These pieces outline how the same catalysts are driving correlated moves across currencies and commodities.