WTI declines to near $90.00 despite escalating Middle East conflict, supply risks

• WTI may appreciate as attacks on Saudi Arabia and an Omani tanker trigger retaliatory threats, heightening Persian Gulf supply risks.

• Potential Russia-Ukraine energy ceasefire claims remain unconfirmed by Kyiv despite discussions with Western allies.

• US releases 4 million barrels from strategic reserves to offset Hurricane Isaias disruptions.

West Texas Intermediate (WTI) declines after two days of gains, trading around $90.00 per barrel during Asian hours on Monday. However, crude oil prices may regain ground following deadly attacks on Riyadh’s King Khalid International Airport, which has prompted United States (US) President Donald Trump to consider joining Saudi Arabia in retaliating against Iran-backed Houthis in Yemen. The Riyadh airport was targeted again on Sunday by Houthi militants, just a day after a previous strike killed 12 people and injured more than 300.

Adding to regional supply risks, a drone struck an oil tanker near the Sohar anchorage off Oman over the weekend, just outside the Strait of Hormuz, highlighting ongoing vulnerabilities despite signs of higher crude exports from the Persian Gulf.

Meanwhile, geopolitical developments surrounding Russia and Ukraine remain uncertain. President Trump claimed that Russia and Ukraine have agreed to an "energy ceasefire," though he provided no specific details.

Ukrainian President Volodymyr Zelenskyy noted that while he discussed an energy ceasefire with leaders from Canada, Finland, and NATO, he was unaware of any agreement between Ukraine and Russia announced by Trump. However, Zelenskyy added that if Moscow were to agree to such a ceasefire, Kyiv would accept it.

US Department of Energy announced the approval of an emergency exchange involving up to 4 million barrels of crude oil from strategic reserves. This measure is intended to help mitigate supply disruptions caused by Hurricane Isaias.

Systematic flows whipsawed as WTI hovers around key CTA trigger

According to TD Securities, systematic players are struggling to find direction as “CTAs [are] whipsawing in WTI,” with recent price action underscoring that “the $90/bbl region is proving to be an important CTA level in WTI crude.” The bank notes that this zone has become a pivotal reference point for trend-following strategies, as crude repeatedly oscillates around it and triggers rapid shifts in positioning.