There was a bit of profit-taking at the onset yesterday but given time to digest the Middle East situation, we’re starting to see oil prices surge higher again today. The jump on the day now sees prices move back up to contest the highs from the opening gap higher yesterday. WTI crude oil is now up well over 5% and is knocking on the door of the $75 level once more:

In times like these, technical levels don’t work too well as headline risks and market emotions take over trading sentiment. Still, the technical levels will factor into any potential slowdown in the momentum amid profit-taking triggers and perhaps acting as psychological barriers.

The talk of the town is that if the US-Iran conflict is prolonged and the Strait of Hormuz remains disrupted, we should easily see oil surge above $100.

So, are traders just taking things day by day? Or perhaps it was a case that there wasn’t enough short positions to squeeze in the first place in the run up for oil prices?

The price action certainly is interesting and the best we can do is try to work out trading sentiment with the tools we have alongside digesting the headlines and fundamental drivers.

The 200-week moving average is now in focus with that sitting at $75.66. Then, there’s also the June 2025 highs around $77.10-55 to watch out for after. All of that will be key checkpoints in gauging the momentum before we get to the $80 mark.

If and when we do start to creep towards $80, it is likely that traders are signaling that they are certain that the oil market disruption is going to be a prolonged one. If so, expect a break of that level to lead to much higher prices in a jiffy.

For now, all eyes will stay on the Strait of Hormuz and how much other energy disruptions are taking place across the region.

But when chasing higher oil prices, do be reminded that the big picture backdrop remains very different to what the war-torn narrative might suggest in the short-term.