Crude Oil Weekly Outlook: Hormuz Risks, Key Levels to Watch

Crude oil's technical structure remains tilted to the upside, while geopolitical uncertainty continues to cloud the broader outlook. Markets are balancing recovering supply against persistent uncertainty surrounding the future governance and security of the Strait of Hormuz, helping keep a geopolitical risk premium embedded in energy prices.

Key technical levels remain in focus:

• WTI crude oil continues to hold above short-term support near $72, with longer-term support concentrated around the $66.50–68 region.
• Brent crude oil continues to hold above the $77 region, with longer-term support concentrated around the $70 region, maintaining the broader geopolitical risk premium embedded in energy markets.

The main geopolitical uncertainty continues to revolve around the future administration and security framework of the Strait of Hormuz. Iran's demands surrounding transit arrangements, potential tolls, reconstruction costs and broader concessions have raised the bar for a lasting agreement, while President Trump has signalled a willingness to move away from the conflict without securing a broader nuclear agreement if the strait is fully reopened.

As these negotiations unfold, a durable framework governing the strait remains critical to restoring longer-term energy market security. As discussed in my previous article, the current environment may draw parallels with historical energy shocks such as the 1973 oil embargo, when geopolitical risk premiums remained elevated until longer-term political and energy-security arrangements helped restore confidence. Crude Oil Outlook: What the 1973 Oil Embargo Tells Us About the 2026 Hormuz Crisis

For markets, however, the direction of price action remains more important than individual geopolitical headlines.

Escalation and de-escalation scenarios should ultimately be reflected in crude oil prices, providing not only potential trading setups but also an important signal for broader intermarket analysis, as changes in energy risk premiums ripple through inflation expectations, bond yields, currencies and global risk sentiment.

The macro backdrop has also shifted following the latest US NFP report, which came in materially weaker than expected at -23k and helped push expectations for a September Federal Reserve rate hike back below 50%. This came despite stronger ISM manufacturing and services indicators pointing to continued economic expansion.

Attention now turns to next week's US CPI report. An upside inflation surprise could revive expectations for additional Fed tightening, particularly if elevated energy prices continue to reinforce inflationary pressures. Conversely, softer inflation alongside weaker labour-market conditions could further reduce expectations for a September hike and improve broader risk sentiment.

Against this backdrop, crude oil remains one of the clearest market gauges for distinguishing between another phase of geopolitical escalation and a more durable transition toward de-escalation.

Crude Oil Price Outlook: Weekly Time Frame – Log Scale

Source: Trading view

WTI crude oil's latest pullback found support at $72, corresponding to the 78.6% Fibonacci retracement of July's advance. Persistent US-Iran tensions helped stabilize prices above that level.

Price action continues to hold above the 70-72 zone, reinforcing risk premium and the broader bullish structure. A sustained move above $77, the multi month support since March 2026 tunred into resistance would expose the next Fibonacci extension levels from July's advance:

• $80.40 – 27.2% Fibonacci extension.
• $83.30 – 38.2% Fibonacci extension
• $86.50 – 50% Fibonacci extension
• $89.60 – 61.8% Fibonacci extension and major zone for a pullback risk given the realignment with the multi-month trendline spanning from the lower bound of the march-June consolidation that gave way to the latest July selloff between 93-77

Such a move would likely coincide with Persistent Hormuz tensions and crude oil refinery strikes, where a sustained hold above the86.50-89 zone prices in another escalation phase for the markets and drawdown risks.

Bearish Scenario

Should crude oil fall back below $72, attention would immediately shift to the $68-66.50 support zone, This area continues to define the broader escalation versus de-escalation narrative for 2026, having repeatedly acted as both support and resistance since 2019. A weekly close below $66.50 would expose the 2026 lows near $55, suggesting markets are beginning to price a longer-term geopolitical de-escalation scenario. Such a development would likely support broader risk appetite across financial markets while easing inflationary pressures.

Written by Razan Hilal, CMT

Follow on X: @rh_waves