The US Dollar Index (DXY) retreated from a near 10-month high of 100.54, trading around 100.20 during Asian hours on Monday, as risk aversion eased following reports that the US-Israel conflict with Iran may end within the next few weeks, potentially allowing oil supplies to recover and energy prices to decline [1]. Meanwhile, West Texas Intermediate (WTI) crude oil prices fell after opening with a gap higher, trading near $96.30 per barrel, but could regain momentum as Middle East tensions intensify following US military strikes on Kharg Island, a hub handling nearly 90% of Iran’s oil exports [1]. US President Donald Trump stated that oil infrastructure was not struck, though Iran has warned it could retaliate against any US-linked oil facilities in the region [1].
WTI crude oil prices retreated from the $100.00 psychological mark, sliding below $96.00 and snapping a four-day winning streak, though downside potential appears limited amid ongoing Middle East conflicts [2]. French President Emmanuel Macron emphasized the need to restore freedom of navigation through the Strait of Hormuz, and EU foreign ministers are meeting in Brussels to discuss a potential naval response to the closure of the Strait [2]. Trump is also in discussions with other countries about policing the Strait, which has eased concerns about supply disruptions and weighed on crude prices [2]. Technical analysis indicates a bullish bias, with WTI holding above the rising 200-period SMA at $85.70 and resistance at $98.90, while support is seen at $94.62 and $90.33 [2].
According to CNBC, U.S. crude futures have topped $100 a barrel as President Trump threatens strikes on Kharg Island's oil infrastructure after hitting military targets on Friday [3]. Trump has called on other countries to send warships to secure the Strait of Hormuz, and the White House plans to announce this week that multiple countries have agreed to help escort oil tankers through the Strait [3]. Trump told reporters that oil prices will "come tumbling down once it's all over" [3]. Despite plans for the largest coordinated release of crude from global stockpiles, oil markets remain highly volatile, with the ongoing conflict and threats to Iranian oil infrastructure keeping prices elevated [3]. Countries worldwide are imposing measures such as fuel export bans and loosening refining standards to deal with the energy shock from the Iran war [3].
Traders are also focusing on the upcoming US Federal Reserve policy meeting, with no change to the federal funds rate expected, but investors will closely monitor guidance for the remainder of the year, particularly regarding inflation risks from the recent surge in energy prices [1]. Additionally, investors are watching for key economic data from China, including retail sales, industrial output, and urban investment [3].
CONCLUSION
Oil prices have surged past $100 a barrel amid escalating tensions in the Middle East, with threats to Iranian oil infrastructure and uncertainty around the reopening of the Strait of Hormuz driving volatility. Despite efforts to coordinate global responses and strategic releases, markets remain highly sensitive to developments in the region. Investors are closely monitoring geopolitical actions and upcoming economic data for further direction.