WTI oil prices continue to climb amid supply concerns driven by the latest U.S. sanctions on Russia
WTI oil prices surged to a new multi-month high of $78.66 on Monday, the highest level since August 14, as a strong bullish rally from the $72.83 higher low extended into its third consecutive day.
The latest U.S. sanctions targeting Russia’s oil industry have intensified supply concerns, driving expectations that WTI prices could climb toward $85 per barrel. These sanctions aim to curb Russian exports to China and India, the world’s largest and third-largest oil importers, as part of ongoing efforts to weaken Russia’s economy following limited progress in the military aspect of the conflict.
The use of sanctions as a strategic tool has yet to significantly impact Russia despite numerous measures imposed. Observers are closely watching the potential reactions from OPEC, where Russia plays a pivotal role, as well as from China and India, both directly affected by the new measures.
Notably, oil prices have shown resilience throughout the war, with the only major spike occurring early in the conflict when prices briefly surpassed $100 per barrel. Even the escalation of conflict in the Middle East last year had limited impact on long-term oil price stability.
So far, sanctions, particularly those targeting Russia’s energy sector—a major revenue source—have caused more damage to the economies imposing them (excluding the U.S.) than to Russia itself. Importantly, they have not led to significant disruptions in oil production or supply, keeping the market relatively stable.
This suggests the current rally may be short-lived and unlikely to alter the broader market outlook unless prices breach the $90 per barrel mark.
From a technical perspective, the daily chart remains firmly bullish, with Friday’s break above the 200-day moving average (200DMA) and the formation of a 5/200 DMA golden cross reinforcing the positive sentiment. However, overbought conditions could create resistance near the previous peak of $78.45 (October 8 high).
Initial support is seen at the Asian session low of $76.65, which aligns with the broken 38.2% Fibonacci retracement of the $95.00/$65.26 range and the 100-week moving average. Further dips should ideally remain above the broken 200DMA at $75.10 to maintain a healthy correction and sustain the bullish momentum. A retest of $78.45, followed by a move through the weekly cloud base at $78.99, could target the psychological $80 mark, reinforced by the 200-week moving average.
Res: 78.56; 78.99; 80.00; 81.35
Sup: 76.65; 75.10; 74.71; 72.83