WTI crude climbs 1.5% to $79.34 on Middle East supply risk

WTI crude oil futures rose $1.20, or 1.5%, to settle at $79.34 a barrel Monday, as renewed geopolitical risk in the Middle East outweighed pressure from a surging US dollar and strong employment data.

"The market is pricing a two-way risk — supply disruption from the Gulf versus demand destruction from a stronger dollar," said James Hyerczyk, a US-based technical analyst and author. "Until the Strait of Hormuz situation is resolved, the risk premium will keep a floor under prices."

Abu Dhabi Murban crude, a key Middle Eastern benchmark, surged 4.31% to $81.51 a barrel after touching an intraday high of $83.93, reflecting a sharper risk premium in Gulf-linked grades. Brent crude held near $96 after jumping 3% last week on US-Iran military exchanges that disrupted maritime infrastructure and delayed the reopening of the Strait of Hormuz. NYMEX August gasoline futures settled at $3.2273 a gallon, while heating oil closed at $4.0143 and natural gas at $2.9040 per million British thermal units.

The divergence between WTI and Middle Eastern benchmarks highlights how the conflict's impact is concentrated on Gulf supply routes while US production remains insulated. The Strait of Hormuz carries about one-fifth of the world's petroleum consumption, and any extended closure could push Brent toward $100. But a strong dollar — at its highest since April after May nonfarm payrolls came in at 172,000, more than double the 80,000 consensus — is capping WTI's upside by making crude more expensive for non-dollar buyers.

The energy price spike rippled through financial markets. Wall Street stocks closed lower as investors worried that higher energy costs could reignite inflation, complicate central bank plans for rate cuts, and weigh on corporate earnings. Technology shares led the decline while Treasury yields moved higher. Gasoline futures rose nearly 6% last week on the initial escalation, with consumers facing higher fuel costs ahead.

Dollar Strength Caps WTI Gains

The US Dollar Index surged to its strongest level since early April after the May employment report, pushing money markets to price a 98% probability of a rate hike before year-end. A stronger dollar reduces crude demand from Europe and Asia, where refiners bid in euros, yen, and yuan. The 10-year US Treasury yield climbed above 4.5%, adding to the macro headwind for commodities.

The last time the dollar traded at these levels, WTI crude was below $75 a barrel. The current setup mirrors the pattern seen in early 2026, when diplomatic progress between Washington and Tehran pulled the risk premium out of crude prices, sending WTI below the 50-day moving average at $91.90. That dynamic has now reversed: the Strait of Hormuz remains closed, and the risk premium is being rebuilt.

Supply Risks and the Path Forward

The Strait of Hormuz handles nearly one-fifth of the world's petroleum trade. When it closed earlier this year, crude oil priced in a worst-case supply shock, with Brent briefly touching $120 a barrel. Traders had begun pricing in a reopening after diplomatic talks progressed, but last week's military exchanges reversed that expectation. A final agreement remains elusive, with disagreements persisting between Washington and Tehran.

Governments drew down strategic petroleum reserves aggressively during the worst of the crisis, and China pulled from existing stockpiles instead of competing for barrels on the open market, taking pressure off global supply chains. Production outside the conflict zone held up better than expected, with analysts now projecting global production growth to exceed consumption growth in the months ahead.

The energy shock pushed inflation higher across major economies earlier this year, and central banks responded by keeping rates elevated. Higher borrowing costs slow manufacturing, cut transportation demand, and squeeze consumer spending — all of which translate into lower fuel consumption. This feedback loop is why the dollar strength story carries as much weight as the supply story.

Traders are monitoring announcements from the US President and Iranian Supreme Leader for further military or diplomatic developments. The status of the Strait of Hormuz remains the key variable; any extended closure could support further price increases. OPEC+ statements on production adjustments may provide additional direction. On the chart, WTI's next resistance sits at $86.13, with support at the $77.22 level, according to technical analysis.

This article is for informational purposes only and does not constitute investment advice.