Key Points:
Tensions in the Strait of Hormuz continue to support oil prices.
Rising US inventories may limit further gains.
WTI and Brent prices are approaching significant breakout zones.
Oil prices stabilized near recent highs as traders assessed the risks of further turmoil in the Middle East. Shipping in the Strait of Hormuz remains slow, with many shipowners choosing to avoid the route. Conflicting signals from the US and Iran have also added to market confusion. Persistent tensions due to sporadic attacks involving Iran, the UAE, and Oman have kept a risk premium in oil prices. However, the absence of any major escalation has limited fresh buying interest.
Rising US inventories could also cap further oil price gains. As shown in the chart below, crude inventories increased by 4.4 million barrels. Gasoline stocks also rose. These figures suggest US supply remains relatively ample, and demand may not be strong enough to drive prices significantly higher. Oil prices may grind higher as long as war and shipping risks persist. But a major market move likely requires a significant disruption to supplies via the Strait of Hormuz.
WTI Oil Price Forecast: Break above $87-$89 Targets $105
The 4-hour chart below shows WTI oil prices forming a constructive structure above $70. A rounded bottom pattern has formed above $70. A break above $87 would target a further move towards the $93.80 and $97 zones.
Notably, the price action from May appears more bullish. A rounded bottom has formed just below a descending trendline. This trendline will be broken around $89.
A break above this descending trendline would likely confirm a bottom and target a move towards the $105 zone. The Relative Strength Index (RSI) is also consolidating above the midline, indicating potential for further upside in the WTI market. However, a break below $66 would invalidate the bullish structure and could lead to further declines.
The long-term outlook for WTI remains optimistic. After the US-Iran war, prices surged from around $66 to near $120 but failed to break the channel's descending trendline. A sharp sell-off from $120 to around $67 followed, driven by this strong resistance.
But WTI prices found a bottom after July's decline. Prices are now retracing back towards the $100 zone. This suggests a potential move to the $125-$130 zone if the price breaks out of this descending channel. On the other hand, a break above $130 could target the $150 zone. The Relative Strength Index (RSI) is also rebounding from the midline, indicating positive momentum for WTI prices.
Brent Oil Price Forecast: Break above $100 Opens Path to $120-$127
Compared to the WTI market, Brent oil price action is stronger. The price held above $80 after declines. A strong rebound in the first week of August 2026 triggered a solid weekly bullish candle, signaling a potential move towards the $100 zone.
On the weekly chart, the 50-day Simple Moving Average has crossed above the 200-day SMA. The RSI is also holding above the midline, indicating strong bullish momentum in the Brent market. A break above the $100 zone could target the $120 area for Brent. Conversely, a break above $120 could aim for further gains towards $135.
The monthly chart for Brent also shows positive price action. A strong rally is evident from the April 2020 lows to the March 2022 highs, followed by a correction from the March 2022 highs to the December 2025 lows, forming a robust, positive bullish structure.
Recent declines in Brent in June 2026 failed to break the key $70 level, followed by a strong rebound. The July monthly candle suggests Brent could target the $127 mark. A break above $127 could pave the way for a strong rally towards the $160-$180 zone.
The RSI is also rebounding from the midline as Brent bounced from the key $70 level. This indicates potential for continued gains in the near term.
Conclusion
The oil price outlook remains optimistic, but the next move hinges on supply risks and technical breakouts. Middle East tensions and slow shipping in the Strait of Hormuz have pushed prices higher. However, rising US inventories may limit gains unless conflict causes a severe supply disruption.
WTI must break above the $87-$89 resistance to target $100-$105. But a break below $66 would weaken the bullish view. Brent shows stronger upside momentum and could target $120-$127 if it breaks above $100. Brent must hold the key $70 level to maintain its upward momentum. Therefore, oil prices may continue to rise gradually, but a stronger rally would require a clear technical breakout or a significant regional supply disruption.
