WTI hits $75.50 amid Mideast tensions

West Texas Intermediate (WTI) climbed above the $75.00 mark on Thursday, hitting its highest level since late January amid geopolitical tensions and tighter supply signals, fueling fresh buying.

The benchmark US crude oil traded around $74.58, up more than 2.5% on the day, after marking an intraday high of $75.53 as traders respond to the escalating Iran-Israel conflict and a sharp drop in US stockpiles.

This multi-month high underscores how quickly Middle East tensions and supply fundamentals can inject fresh bullish momentum into the oil market, keeping investors on edge and fueling talk of further gains if risks to key shipping routes intensify.

The recent Israeli airstrikes on Iranian nuclear and oil infrastructure have intensified concerns over potential supply disruptions in a region vital to global energy flows.

The Strait of Hormuz, a narrow passageway through which about 30% of the world’s oil supply moves daily, is now under heightened scrutiny as tensions flare. In response, traders have factored in a significant geopolitical risk premium, with Goldman Sachs estimating that the ongoing conflict has added roughly $10 a barrel to crude prices.

Adding to the bullish momentum, a sharp drawdown in US crude inventories has reinforced concerns about tighter near-term supply.

Latest data showed that stockpiles tumbled by over 11 million barrels last week, marking one of the steepest weekly declines in over a year. This fundamental squeeze, combined with the geopolitical premium, has pushed WTI prices firmly into the mid-$70s.

However, market strategists caution that while heightened Middle East tensions support further upside, strong US shale production and ample spare capacity within the Organisation of the Petroleum Exporting Countries (OPEC) could cap any extended rally.

Unless the conflict escalates into a wider regional crisis or disrupts shipping through the Strait of Hormuz, crude prices may struggle to sustain levels well above $80 per barrel.