Iran Sanctions Keep Geopolitical Premium in Oil Prices High

The geopolitical premium in oil prices remains high due to ongoing tensions between the US and Iran. The US has expanded secondary sanctions against Iran, but has not specified immediate punishment for any countries. This has eased concerns of immediate disruptions to Middle East oil supplies, allowing traders to profit from the recent rally.

However, risks remain as shipping hazards are still high in the Strait of Hormuz. A tanker was recently hit off the coast of Oman, and Iran has threatened to take action against those who do not comply with rules in the area. The US strategic reserves have also declined to their lowest level since 1982.

WTI crude oil is currently consolidating below a descending trend line from April's highs, but a break above $90 could push prices towards the $100-$105 area. This is according to technical analysis, which shows a strong bullish price structure for WTI crude oil. The chart indicates that the 10 SMA is turning higher while weekly candles remain strong.

Brent crude oil also shows constructive price action as it remains above the $90 area. If Brent crude oil breaks above $100, it could push prices back towards $120. Technical analysis suggests a positive outlook for both WTI and Brent crude oil in the short term.