WTI consolidates below $84.50, two-week top as bullish bias remains amid Hormuz standoff

• WTI continues to draw support from geopolitical risks stemming from the US-Iran standoff.

• The risk of a broader regional conflict adds to supply concerns and supports the commodity.

• Any corrective pullbacks could still be seen as a buying opportunity and remain cushioned.

West Texas Intermediate (WTI) – the benchmark US Crude Oil price – extends its consolidative price move through the first half of the European session and currently trades near the $84.25-$84.30 area, close to a two-week high set earlier this Tuesday. The fundamental backdrop, meanwhile, seems tilted in favor of bulls and backs the case for a further near-term appreciating move.

The uncertainty stemming from the US-Iran standoff over the Strait of Hormuz keeps the geopolitical risk premium in play and continues to act as a tailwind for the black liquid. In fact, President Trump told reporters on Monday that the US had total control over the strategic waterway, referring to an ongoing naval blockade of Iranian ports that Washington has threatened to carry on indefinitely.

Trump repeated his idea of declaring the strait as a US territory and threatened to bomb Oman if it gets in the way of reopening the waterway. Iran, on the other hand, has also claimed that Hormuz is under its control and demanded that the US agree to Tehran's conditions for shipping to resume through the waterway. Moreover, disruption in traffic through the Red Sea supports oil prices.

Rabobank’s Energy Markets team notes that price action has remained highly sensitive to shifting headlines around the Hormuz crisis. They point out that “since the end of June’s MoU, Brent crude has swung between roughly $72- 102/bbl, following every rumor of a peace deal or renewed escalation,” underscoring the market’s ongoing vulnerability to geopolitical news flow.

Iran-backed Houthi rebels in Yemen have stepped up attacks near the Bab al-Mandeb Strait and claimed that they had launched a ballistic missile attack on a Saudi military landing ship. This raises the risk of a broader regional conflict and adds to supply concerns, validating the near-term positive outlook for crude oil prices. Hence, any corrective pullback is more likely to be bought into.