Crude Awakening: Is $75 the New Baseline for WTI?

The price of July WTI crude oil has surged to $74.84—a 4.3% leap in just days—as geopolitical fireworks between Israel and Iran collide with tight global supply dynamics. Is this a fleeting panic rally or the dawn of a sustained $75+ era for crude? Let's break it down through the lens of technical momentum and macroeconomic drivers, and decide whether to dive in or stay on the sidelines.

The Macro Drivers: Geopolitics, OPEC+, and Demand Hope

1. Geopolitical Tensions: The Strait of Hormuz Wild Card

The Israel-Iran conflict remains the single biggest wildcard. With 20% of global oil transiting the Strait of Hormuz, any escalation risks crippling supply. While disruptions haven't materialized yet, U.S. backing for Israel and Iran's nuclear brinkmanship keep markets on edge. Analysts at Trading Economics warn that sustained hostilities could push prices to $85–$95—or even $100+ if a chokepoint shutdown occurs.

2. OPEC+ Supply Discipline: A Tightrope Walk

OPEC+'s June agreement to raise output by just 411,000 bpd (a fraction of 2023's cuts) signals supply restraint. Saudi Arabia's recent price cuts for Asian buyers aim to balance demand growth without flooding markets. Meanwhile, U.S. shale production faces headwinds: rig counts in the Permian Basin have dropped to 2021 levels, and drillers are hesitant to invest at current prices.

3. Demand Optimism: Trade Deals and Seasonal Strength

Renewed U.S.-China and U.S.-Canada trade talks are easing fears of a global supply glut. Add in the spring switch to summer-grade gasoline—a seasonal refinery ramp-up—and you've got a demand tailwind. The APMM model now scores “Bullish (Weak),” with commercial traders piling into long positions—a sign “smart money” sees a trend reversal.

Technical Momentum: Overbought, but Not Over?

The RSI has surged into overbought territory (above 70), a classic warning of an impending pullback. Yet, technicals here are nuanced:
- Key Resistance Levels:
- $72.00: Break above this unlocks a sprint toward $73.84 (February's high) and $76–$77 (Fibonacci extensions).
- $80.00: A major psychological barrier. A close above here could trigger a stampede toward $95+.
- Critical Support:
- $64.20: A drop below this tests $61.06 (June's low), with $58.00 as a final line in the sand.

The symmetrical triangle pattern since early 2023 suggests a breakout is near—but which way? Bulls need to sustainably reclaim $72.00, while bears would pounce on a collapse below $64.20.

Traders vs. Investors: Who Wins Here?

Short-Term Traders: Play the Overbought Edge

The RSI at 70+ is screaming “take profits” or “go short.” If prices falter below $70.30 (the 61.8% Fibonacci retracement), a sharp drop toward $64.20–$61.06 is likely. Aggressive shorts could target $58.00, but only if geopolitical fears fade.

Long-Term Investors: Hold the Fort—With Stops

The fundamentals are bullish: supply constraints, geopolitical risks, and seasonal demand all point higher. But don't go all-in. Lock in gains above $75, then set stops below $60.00 to protect principal. A $65.01–$66.33 range by year-end remains plausible, but $80+ isn't off the table if tensions explode.

Action Plan for Your Portfolio

1. If You're Bullish:
2. Buy dips to $70.00–$72.00, targeting $77.00–$80.00.

3. Use options: A long call spread (e.g., $75–$80 strike) caps risk while profiting from a breakout.

4. If You're Bearish:

5. Short above $73.84, aiming for $64.20.

6. Set a stop-loss above $77.00 to avoid a $95+ blowup.

7. For the Faint of Heart:

8. Avoid the trade. Crude's volatility (RSI spikes/dips) and geopolitical uncertainty make this a high-wire act for all but the most experienced.

Final Take: Stay Nimble, but Don't Chase

$74.84 is a milestone, but it's not a guarantee. If you're in, protect your gains. If you're out, wait for a pullback to $65–$70 before diving back in. This isn't a “set it and forget it” market—it's a sprint, not a marathon.

Data as of June 6, 2025. Always consult your financial advisor before making investment decisions.