The WTI crude oil price remained on edge today, June 10, as investors reacted to the new developments in the Middle East, where the US launched new strikes against Iran. It retreated to $89, down substantially from the year-to-date high of $119.
US launches strikes against Iran
The WTI crude oil benchmark retreated after the US launched retaliatory strikes against Iran. The US military targeted the country’s air defense, ground control stations, and surveillance radar stations.
These attacks were in response to the Iranians decision to down a US Apache helicopter that costs over $50 million. It had two pilots, who were rescued on Monday this week.
In a statement on Tuesday, President Donald Trump said that the US had to respond to the attack. In response, Iran launched strikes against US installations in the region. They attacked the US Fifth Fleet in Bahrain with drones and threatened more severe responses if the hostilities escalate.
There are signs that Trump does not want any escalation, as we experienced earlier this week when he urged Iran and the Israelis to stop shooting. The two had engaged in major exchanges a day earlier, with Iran launching a barrage of missiles against Israel.
Meanwhile, Israel launched attacks against the historic port city of Tyre in Lebanon, killing at least eight people. These attacks may lead to more attacks between Israel and Iran. Analysts believe that Israel is intensifying these attacks in a bid to restart the war between the US and Iran.
Therefore, the WTI crude oil remained under pressure as investors waited for a response from the US and Iran. A return to a full-blown war between the two sides will push oil prices higher as Iran has warned that it may expand its operations, potentially by closing the Red Sea.
WTI also dropped after the US said that more ships were passing through the Strait of Hormuz, a move that has eased the supply concerns. Another report showed that Saudi jet fuel supply to Europe had jumped to the highest level since the war started. Saudi is leveraging its Red Sea pipeline to ship over 7 million barrels of oil per day.
WTI crude oil price technical analysis
WTI crude oil price chart | Source: TradingView
The daily chart shows that the WTI crude oil price has come under intense pressure in the past few weeks. It has retreated from a high of $119.50 a few months ago to $88.97 today.
Oil has slipped to the 50% Fibonacci Retracement level. It has also crossed the 50-day Exponential Moving Average (EMA) and the Ichimoku cloud indicator.
There are also signs that it has formed a head-and-shoulders pattern, a common bearish reversal sign. Therefore, this pattern means that the price will continue falling in the coming days or weeks. This view will be confirmed if it drops below the key support level at $86.27. If it happens, the next key level to watch will be at $79, its lowest point on April 17.
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