Oil Rally Accelerates As Hormuz Shipping Risks Return

Middle East geopolitical risks have become the core driver of crude’s near-term price movement, with Citi highlighting prominent upside risks for oil markets amid new U.S. trade restrictions on Iran.

U.S. President Trump has unveiled plans to reinstate maritime blockades against Iran, plus a 20% security surcharge on all shipments passing through the Strait of Hormuz. The new levy serves to offset U.S. operational costs for securing regional shipping routes.

Citi stresses full enforcement of the new policies will sharply escalate U.S.-Iran tensions. It raises the odds that Iran will terminate its bilateral memorandum of understanding before the U.S. midterm elections, a scenario that would keep global crude prices elevated for a prolonged period and sustain a firm geopolitical risk premium.

Even with rising geopolitical uncertainty, the bank maintains its baseline outlook. Citi’s core forecast calls for renewed U.S.-Iran diplomatic talks within one to two weeks, leaving its current crude price projections unchanged for the near term.

Technical indicators continue to back bullish crude momentum. WTI crude has completed a clear V-shaped rebound on daily charts. The AO indicator confirms strengthening bullish sentiment, and a decisive break above the key $76 level has solidified the oil’s short-term uptrend.

The market is now targeting the critical $83.0 resistance threshold, a key level that dictates crude’s medium-term trend. A convincing breakout will open further upside room and extend the current bullish structure. In contrast, repeated failures to break above $83.0 may terminate the ongoing rebound and trigger a technical pullback.

A key trend-defining window falls around July 16, when crude is set to choose its next directional move. A mix of evolving U.S.-Iran tensions and technical breakout momentum will guide the asset’s near-term pricing trajectory.