WTI traded around $89.65 in early European hours on Friday, edging down after Donald Trump said the US would not attack Iran before November’s midterm elections. Reuters reported he described talks with Tehran as “productive” and said crude was moving through the Strait of Hormuz in “record numbers”, a tone that eased near-term price pressure. Separately, the International Energy Agency agreed to accelerate the release of oil stocks and prioritise diesel supplies after G7 countries agreed last week to release 100 million barrels of crude and diesel. In US supply data, the EIA said crude stockpiles fell by 3.186 million barrels in the week to October 2, versus the prior week’s rise of 922,000 barrels, while the market had expected a 1.9 million-barrel build.
Market attention remains on Middle East risk premia into the US midterms, with reports of tanker attacks beyond the Omani route, including off Qatar and in the Gulf of Oman, and references to Iran strike planning, even as regional flows are described as largely normalised. On technicals, WTI held above the 100-day SMA and the lower Bollinger Band, with RSI (14) near 49; resistance sits near $92.25, then $99.35, while support is seen at $85.15 and $84.10.
Geopolitical Relief and Persistent Risk Premiums
We see WTI crude consolidating around $89.65 following geopolitical shifts and the decision to delay actions against Iran before the November midterms. This temporary relief has cooled off oil prices, but we believe derivative traders should prepare for sudden shifts as the risk premium remains highly sensitive. We suggest watching the $89.50 support level closely to gauge near-term selling pressure.
Historically, geopolitical risk premiums can collapse quickly, much like in early 2024 when easing Middle East tensions dragged WTI down by over 10% despite OPEC+ extending voluntary supply cuts of 2.2 million barrels per day. With the G7 and IEA actively coordinating stock releases to fight inflation, supply pressures are being artificially managed. We recommend that derivative traders monitor the volatility index for oil, as implied volatility tends to spike dramatically in the three weeks leading up to US elections.
Tight Physical Market and Technical Outlook
On the physical side, the market remains surprisingly tight, as seen in the unexpected 3.18 million barrel draw in US crude inventories. Technically, WTI is holding above its 100-day moving average near $84.10, which keeps the long-term upward trend alive. Because the Relative Strength Index is sitting at a neutral 49, we favor neutral or range-bound strategy structures for the immediate future.
If we see a breakdown below the immediate support of $85.15, traders using leverage may want to hedge with defensive put options to protect against a slide to the $84.00 mark. On the flip side, a sustained push past the $92.25 resistance could open up a fast run toward the key $99.35 level. We must stay highly flexible as political headlines will likely trigger sharp, short-term swings in the coming weeks.
