Oil Prices Consolidate Near Highs as US-Iran Escalation Halts Strait of Hormuz Traffic

Geopolitical Tensions Drive Oil Price Support

Oil prices held steady near recent highs on Monday as escalating US-Iran military strikes intensified concerns over supply disruptions. The Strait of Hormuz, a critical chokepoint for global oil shipments, saw traffic plummet from 30-40 vessels daily to just six on Sunday, signaling a sharp contraction in maritime activity amid heightened risks.

Iranian mediators continue diplomatic efforts to de-escalate tensions, though progress remains uncertain. Analysts note that without a clear resolution, downside pressure on oil prices will remain constrained, with markets pricing in continued supply risks.

Upcoming Economic Catalysts

Traders will monitor Tuesday’s US Consumer Price Index (CPI) report for clues on inflation trends. Stronger-than-expected data could fuel hawkish Federal Reserve expectations, potentially weighing on oil prices amid fears of tighter monetary policy and slower economic growth. Conversely, softer inflation figures may ease rate hike concerns, supporting crude demand.

Additional focus falls on Fed Governor Christopher Waller’s remarks on the economic outlook and Chair Jerome Powell’s testimony later this week. US Producer Price Index (PPI) and Retail Sales data will further shape rate expectations.

Technical Analysis: XAUUSD Resistance at 78.00

On the daily chart, XAUUSD faces a key resistance zone near $78.00, where selling pressure may emerge. A confirmed break above this level could open the door to a move toward the $90.00 psychological handle. Support sits at $68.00, with a break lower likely targeting deeper levels.

The 4-hour timeframe reinforces the $78.00 resistance with a downward trendline, favoring bearish setups for retests. On the 1-hour chart, buyers may defend a minor support zone around $72.50, while sellers eye a breakdown toward $68.00.

Risk Sentiment and Market Outlook

Global risk appetite remains fragile amid geopolitical uncertainty. Safe-haven flows into the US dollar could cap gains in oil-linked currencies, while equity markets may face volatility ahead of key economic releases.

Traders should watch for breakouts in XAUUSD around critical technical levels and monitor developments in US-Iran negotiations for directional cues.

Risk Disclaimer: Trading involves significant risk of loss. Past performance is not indicative of future results. Always conduct independent research and consider your risk tolerance before making trading decisions.