Crude Oil Price Steady as Iran Plots Escalation Amid US Sanctions Threat

Crude oil prices are holding steady on Hyperliquid as investors assess the impact of the ongoing US-Iran stalemate. Brent, the global benchmark, rose to $92.90, while West Texas Intermediate (WTI) climbed to $86.50. Both benchmarks have jumped by over 32% from their July lows.

Iran Warns of Potential Escalation

Crude oil may continue rising as Iran reportedly considers escalating tensions, while President Donald Trump plans additional sanctions against the country. Treasury Secretary Scott Bessent is set to unveil the new sanctions package on Monday.

According to Bloomberg, the Iranians are considering military escalation to punish the US and its allies. Iranians have already seen reports that the US was running out of ammunition and that conditions on USS Lincoln have deteriorated. As a result, IRGC officials believe that they are better positioned to escalate.

An escalation would be highly bullish for crude oil prices. In addition to blocking the Strait of Hormuz and Bab el-Mandeb Strait, Iranians may boost attacks against oil and gas infrastructure in the region. Iran is also considering attacks against key US interests, including the subsea internet cables that pass through the Strait.

These events would come at a time when the oil inventories in key countries like the United States, China, South Korea, and Japan continue to dwindle. In the US, the Strategic Petroleum Reserve (SPR) have dropped to the lowest levels in decades. 

Still, despite these risks, oil prices have remained below the year-to-date high because of weak Chinese demand. Also, data show that millions of barrels of oil are passing through the Strait of Hormuz. 

Crude Oil Price Technicals Point to Exhaustion

The daily chart shows that Brent has been in an uptrend in the past few days and is now attempting to fill the fair value gap formed on July 27. 

However, there are signs that the rally is nearing the exhaustion level. The Average Directional Index (ADX) has dropped to 22.34 from the July high of 40. A drop in ADX is a sign that the uptrend is losing momentum.

Crude oil has also formed a rising wedge pattern, which is made up of two ascending and converging trendlines. This pattern often leads to a bearish reversal. 

Therefore, oil may see a bearish reversal, potentially retreating to the 200-day moving average of $84. However, with the US-Iran conflict poised to escalate, and given the existing fair value gap, there is a possibility it could rebound past $100.

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