WTI Price Forecast: Oil supply tightness supports further upside above $90

West Texas Intermediate (WTI) crude oil futures on NYMEX maintained a stable trading range around $86.00 during Friday's European trading session, near its three-week peak of $87.38. The global oil supply remains constrained due to the closure of the Strait of Hormuz and Bab el-Mandeb Strait, which constitute 27% of global energy supply.

No diplomatic breakthroughs between the United States and Iran on reopening the Strait of Hormuz appear imminent. Tensions persist between the US and Iran, as President Trump has threatened severe economic repercussions for any nations supporting Iran. Analysts at Danske Bank observe that recent US rhetoric towards Iran has become more aggressive, warning of catastrophic consequences for countries maintaining financial or commercial ties with Tehran.

Secretary Scott Bessent of the US Treasury emphasized the severity of potential sanctions, suggesting they could be the toughest ever imposed. According to Danske Bank, such a stringent sanctions policy might actually decrease the probability of a renewed large-scale military conflict, despite concerns about potential overestimation of geopolitical risks in oil markets.

On the technical chart, WTI US Oil is trading at $85.74, maintaining a bullish outlook as it stays above the 20-day exponential moving average ($82.03). The Relative Strength Index (14) at 58.54 remains in positive territory, indicating the current advance still has room to grow. Immediate support is forecasted at the 20-day EMA ($82.03), with a potential downward breach signaling a more significant corrective phase.

If WTI stays above $82.03, the technical analysis indicates a likelihood of further consolidation with an upward bias, while a daily close below this support would undermine the current bullish structure. Oil prices are primarily driven by supply and demand dynamics, with geopolitical instability, wars, and sanctions also playing a crucial role.

Decisions from OPEC, a coalition of major oil-producing nations, and the value of the US Dollar, which affects oil's trade in US Dollars, are additional influential factors. Weekly oil inventory reports from the American Petroleum Institute (API) and the Energy Information Administration (EIA) also impact WTI prices, with decreases in inventories often indicating increased demand.

OPEC's production quota decisions, represented by OPEC+ which includes ten non-OPEC countries such as Russia, can significantly sway WTI prices by altering supply levels.