Geopolitical risks in the Middle East are providing significant support to crude oil markets as tensions between the United States and Iran continue to escalate. According to reporting on August 18, 2026, the deterioration of U.S.-Iran relations has created renewed concerns over maritime supply disruptions via the Strait of Hormuz. Iran has announced it will adopt an 'active defensive' military posture, signaling a shift toward a more assertive stance as diplomatic efforts toward a permanent solution remain stalled.
The United States, meanwhile, has indicated it will not consider extending a temporary truce. Complicating the situation further, traffic through the Strait of Hormuz remains restricted, with only 6 commodity vessels crossing on August 15th compared to an average of 11 over the preceding 10 days. Strikes on vessels exiting the Strait have added to concerns about tanker traffic returning to normal levels.
The Energy Information Administration (EIA) anticipates a loss of 600,000 barrels of crude per day from the Middle East for the remainder of 2027 due to these supply restrictions. However, some relief has emerged as diesel and gasoline shipments from China eased global products market tightness in July following a relaxation of Chinese restrictions related to Iran. Domestic natural gas fundamentals present a contrasting picture.
The EIA projects that average dry-gas production for 2026 will reach 111.2 billion cubic feet per day (Bcf/d), with U.S. LNG exports anticipated to reach 17.4 Bcf/d. Storage levels are expected to reach 3.985 trillion cubic feet (Tcf) by the end of October, representing approximately 5% above the five-year average.
This comfortable inventory position reflects reduced demand for LNG feedgas due to maintenance at the Freeport LNG terminal and other facilities. WTI Crude Oil has reclaimed the $84 price area, trading at $84.25 on August 18th. The contract remains technically constructive, holding above its key exponential moving average (EMA) cluster with the 50 EMA at $81.85 and the 100 EMA at $81.28.
Buyers have stepped in above the $81.76 support level, and as long as price maintains above this area, the recovery from August lows may continue. The Relative Strength Index (RSI) stands at 59, indicating strong upward momentum without overbought conditions. Technical resistance appears at $86.87, $90.56, and $93.58, while support levels sit at $81.76, $78.39, and $74.38.
Brent Crude Oil is testing important resistance at $91.13 after a strong rally from the $78.26 support area. The contract is trading at $91.30 and sits comfortably above both the 50 EMA at $87.63 and 100 EMA at $86.61. The RSI has reached 65, reflecting strong upward momentum though showing early signs of overbought conditions.
A confirmed breakout above $91.13 could expose resistance levels at $93.78, $97.26, and $102.02. Support can be found at $86.67, $82.06, and $78.26. Natural gas remains technically pressured, trading near $2.70 after bouncing from the $2.62 support zone.
While the contract has recovered, all moving averages remain below price and the downtrend line remains in place. Recent candles have formed below the resistance zone of $2.73 to $2.80, suggesting consolidation rather than a breakout. The RSI stands at 43, indicating weak but stabilizing momentum.
Key resistance sits at $2.73, $2.80, $2.87, and $2.95, while support levels are positioned at $2.62, $2.55, and $2.50. The energy complex continues to exhibit a dual dynamic, with Middle East maritime risks providing the primary bullish factor for crude oil and global LNG markets, while abundant U.S. gas production and elevated storage levels provide a significant buffer for the domestic natural gas market. Sources cited include FX Empire analysis and Energy Information Administration forecasts.
Source: fxempire.com