Oil Surge Keeps Global Markets on Edge Amid Hormuz Risks 

Share on:

Key Takeaways

*Oil remains the dominant macro driver across global financial markets as geopolitical tensions continue escalating in the Middle East.

*Crude prices extended gains after President Donald Trump rejected Iran’s latest proposal, reinforcing fears that disruptions in the Strait of Hormuz could persist.

*Reports of possible renewed military actions and discussions surrounding naval escorts for commercial ships further intensified supply concerns.

Market Summary

Oil remains the dominant macro driver across global financial markets, with prices continuing to trade at elevated levels amid escalating geopolitical tensions and ongoing fears surrounding the Strait of Hormuz. Crude prices extended gains after President Donald Trump rejected Iran’s latest proposal aimed at easing sanctions and reducing naval tensions, reinforcing expectations that disruptions to global energy supply routes could persist for longer. Reports of possible renewed military actions and discussions regarding naval escorts for commercial vessels moving through Hormuz further intensified supply concerns. As a result, WTI crude remained around the $98–101 region while Brent crude traded above $103–107 in recent sessions, representing a substantial increase compared with pre-conflict levels.

The Strait of Hormuz remains the central focus for energy markets because it handles approximately one-fifth of global oil shipments. Any threat to shipping flows through the region immediately raises concerns about global supply shortages, higher transportation and insurance costs, and broader energy market instability. These fears have become increasingly important following Reuters reports suggesting that export disruptions tied to the Iran conflict have already contributed to OPEC production falling toward multi-decade lows. Although OPEC+ has discussed potential production increases, markets remain skeptical about whether additional supply can fully offset the geopolitical risks currently impacting energy flows. Traders are therefore reacting more aggressively to geopolitical headlines than to traditional supply-demand fundamentals.

At the same time, elevated oil prices are feeding directly into broader macroeconomic concerns, particularly inflation. The sharp rise in gasoline and energy prices was one of the main contributors to April’s hotter-than-expected US CPI data, reinforcing fears that inflation may remain sticky for longer. This has strengthened expectations that the Federal Reserve may need to maintain higher interest rates for an extended period, supporting the US dollar while simultaneously pressuring risk assets such as technology stocks and cryptocurrencies. Oil has effectively become the transmission mechanism through which geopolitical tensions are impacting inflation expectations, monetary policy outlooks, and overall market sentiment.

Despite the strong bullish backdrop, momentum in crude oil has started to moderate slightly as investors adopt a more cautious wait-and-see approach ahead of the high-stakes Trump–Xi summit in Beijing. Markets are closely watching whether China may play a larger diplomatic role in discussions surrounding Iran, given its importance as a major buyer of Iranian oil. Any signs of progress toward de-escalation, stabilization of shipping conditions, or renewed negotiations could trigger profit-taking in oil markets after the recent surge. However, as long as uncertainty surrounding the Strait of Hormuz and broader Middle East tensions persists, oil fundamentals are likely to remain firmly supported, keeping volatility elevated across commodities, forex, equities, and global macro markets.

Technical Analysis

Crude Oil, H4

Crude oil continues to trade within a broader recovery structure after rebounding sharply from the April lows near the 78.80 region. Price action has gradually stabilized above the key 96.50 resistance-turned-support area, suggesting that bullish momentum remains intact despite the recent consolidation phase. The earlier breakout above the descending trendline also reinforced the shift away from the previous bearish structure, with buyers continuing to defend higher lows in the near term.Recent candles show oil attempting to build momentum again after the pullback from the 104.75 resistance zone. While upside progress has been relatively measured, the market continues to hold above the important Fibonacci support levels, indicating that buyers are still maintaining control of the broader short-term recovery trend.

Momentum indicators are also beginning to improve. The Relative Strength Index (RSI) has recovered toward the upper-mid range and remains above the 50 level, reflecting strengthening bullish momentum and improving market sentiment. Meanwhile, the MACD is turning higher again with bullish histogram bars reappearing, suggesting that upside momentum may continue building following the recent correction.

Overall, crude oil appears to be consolidating within a constructive recovery structure, with markets closely watching whether price can sustain momentum above the 98.60 area to support a further push toward the next resistance region near 104.75.

Resistance Levels: 104.75, 110.85

Support Levels: 91.15, 85.90