Oil News: Gulf Supply Risk Returns as Brent Reclaims the 50-Day MA

Iran seeks cargo fees of 5% to 7% and control over vessels, leaving a workable Hormuz reopening out of reach. Restricted tanker traffic keeps Gulf barrels trapped, forcing refiners to draw commercial inventories and seek alternatives. Citi lifted its third-quarter Brent forecast to $80 as the disruption persists and Gulf supply remains constrained.

Crude oil finished higher Friday after the market reconsidered this week’s Hormuz diplomacy and decided nothing announced so far will move a barrel. Brent and WTI sold off hard earlier in the week on hopes that Iran and Oman were close to a shipping deal. Then the proposed terms came out and the buying started. Iran wants control over the route, fees on every cargo and the authority to block U.S. and Israeli-linked vessels. Brent jumped back above the 50-day moving average on the rally and the near-term tone flipped. October Brent crude oil settled at $83.55, up $1.06 or 1.3%. September WTI crude oil finished at $78.18, up 89 cents or 1.15%. The weekly damage was still heavy. Brent lost more than 8% and WTI fell more than 7%. The market priced a deal that does not exist yet and spent the back half of the week paying for it.

October Brent crude oil futures closed higher for a third straight session on Friday, reaffirming Wednesday’s closing price reversal bottom at $78.11. The market found support last week at $78.11, just inside the long-term retracement zone at $79.01 to $74.26 and just in front of the 200-day moving average at $75.56. The subsequent rally jumped the 50-day moving average at $82.26, putting the market in a strong position to extend the rally. Nonetheless, the market still faces several headwinds before it’s even a threat to challenge the major tops at $95.30 and $99.12. These headwinds include an intermediate retracement zone at $84.90 to $88.25 and swing tops at $86.33 and $91.36. Monday’s direction is likely to be determined by trader reaction to the 50-day moving average.

September WTI crude oil futures closed higher on Friday, putting the U.S. benchmark within striking distance of the 50-day moving average at $79.03. Trader reaction to this trend indicator will set the tone on Monday. A sustained move over the 50-day MA will signal the presence of buyers. Initially, WTI could face headwinds at $80.31 and $81.21. Overcoming the latter, however, could launch an acceleration into $84.54. This is the last resistance before the main tops at $86.87 and $93.50, and the contract high at $95.30. A failure to overtake the 50-day MA will indicate the presence of sellers. This could lead to an early retest of the minor Fibonacci level at $77.20 and the long-term 50% level at $75.39. Taking out the swing bottom at $74.24 will signal a resumption of the downtrend with the 200-day moving average at $71.36 the next target, followed by the long-term Fibonacci level at $70.70.

Iran and Oman agreed on a route. That is the part nobody was worried about. The fees and the vessel restrictions are where the deal falls apart. Iran is pushing for 5% to 7% of cargo value on every transit. Oman floated 3%. Washington wants zero. Iran also wants to decide which ships pass through and is looking at barring anything tied to the U.S. or Israel. That is not a commercial negotiation anymore. That is a fight over who controls the most important chokepoint in global energy and the market figured that out Friday. The selloff earlier in the week was trade...