Crude Oil Extends Gains as Traders Hedge Into Weekend Amid Risk of US Strikes on Iran
Key Takeaways
- •Houthi missile strikes on Saudi Aramco drove crude oil to new highs by raising supply-disruption risk in one of the world's largest producing nations.
- •The Wall Street Journal reported that the top US commander in the Middle East made a rare in-person visit to brief President Trump on military options for Iran as Washington weighed resuming major combat operations.
- •Traders are hedging exposure into the final weekend before US midterm elections, since a possible US attack during the market closure could push prices higher, while no attack might leave oil opening lower on Monday.
- •Some market participants see a potential US strike as an exit strategy in which bullish bets are unwound after an initial spike, depending on Trump's remarks and the strength of Iran's retaliation.
- •On technical charts, USOIL buyers continue to defend an upward trendline on the 4-hour and 1-hour timeframes, with key resistance positioned around the 110.00 level.
Crude oil extended its rally into new highs in the previous session after the Houthis targeted Saudi oil company Aramco in a widespread wave of missile attacks. The strike on Aramco underscores why the Saudi-Houthi conflict matters for crude: Saudi Arabia is one of the world's largest oil producers, so any escalation that threatens its infrastructure feeds directly into supply-disruption risk.
The bullish momentum then accelerated after the Wall Street Journal reported that, in a rare in-person visit to the White House, the top US commander in the Middle East briefed President Trump on military options for Iran as the United States weighed resuming major combat operations.
Attention now shifts to the weekend — the last before the US midterm elections — where concerns of a possible US attack over the break persist. Hedging flows into the weekend could push oil prices even higher. Because oil trading pauses over the weekend while geopolitical developments do not, trimming or hedging exposure ahead of the break is a routine risk-management response when headline risk is elevated.
The market remains supported by the ongoing Saudi-Houthi conflict and the possibility of renewed US strikes. A significant correction in oil prices would require either a de-escalation in the Saudi-Houthi conflict or a surprising breakthrough in US-Iran negotiations.
Market participants are also weighing the possibility that another US attack could serve as an exit strategy, meaning traders could unwind bullish bets after an initial spike. That outcome would hinge on what Trump says following a potential strike and on how strong Iran's retaliation proves to be.
If no attack materializes this weekend, oil prices could open lower on Monday, with subsequent moves dependent on further developments in the Middle East.
Crude Oil Technical Analysis — Daily Timeframe
On the daily chart, crude oil's CFD contract (USOIL) extended gains into new highs as fears of imminent US strikes on Iran grew. There is limited additional detail to glean from this timeframe, as the most important levels remain the lower bound of the channel and resistance around the 110.00 level.
Crude Oil Technical Analysis — 4-Hour Timeframe
On the 4-hour chart, an upward trendline continues to define the bullish momentum. Buyers keep leaning on the trendline, with a defined risk below it, to push into new highs. Sellers, on the other hand, want to see the price break lower to pile in for a correction toward the lower bound of the channel.
Crude Oil Technical Analysis — 1-Hour Timeframe
On the 1-hour chart, buyers continue to have a better risk-to-reward setup around the trendline, while sellers need a break below it to open the door for new lows. The red lines on the chart define the average daily range for today, a concept explained further here.
Upcoming Catalysts
The trading week concludes today with the release of the US Employment Cost Index — the Labor Department's gauge of wages and benefits — but the focus will remain on Middle East developments.
Source: ForexLive — Crude oil extends gains as traders hedge into weekend amid risks of US strikes on Iran
