During European trading hours on Friday, the crude oil market showed a slight decline, but overall prices remained near six-month highs, poised for their first weekly gain in three weeks. As of 19:33 Beijing time, specific quotes were as follows: Brent crude futures were quoted at $71.39 per barrel, down 51 cents, a decrease of 0.7%; W&T Offshore crude was quoted at $66.13 per barrel, down 27 cents, a decrease of 0.41%.
Looking at the weekly performance, Brent crude has accumulated a gain of 5.6% so far this week, while W&T Offshore crude has gained 5.27%, highlighting that market pricing for geopolitical risks is continuing to heat up. In the short term, oil prices are maintaining a strong overall pattern, while the struggle between bulls and bears is gradually intensifying.
The core driver of recent oil price fluctuations is the concern over geopolitical risks stemming from the escalation of tensions between the US and Iran. US President Donald Trump clearly stated on Thursday that "something very bad" would happen if Iran did not agree to restrict its nuclear program, setting a 10 to 15-day deadline for Iran. This tough stance significantly heightened market panic, pushing war risk premiums higher.
Data shows that traders and investors have recently substantially increased their purchases of Brent crude call options, fully reflecting market expectations for subsequent oil price increases. Furthermore, Iran's military movements have amplified market concerns – according to reports from local news agencies, Iran plans to conduct joint naval exercises with Russia after temporarily closing the Strait of Hormuz for military drills.
As a crucial global oil transport chokepoint, the Strait of Hormuz handles about 20% of the world's oil supply. Iran faces the oil-rich Arabian Peninsula across the strait. A conflict in this region would directly restrict the flow of oil into global markets, thereby significantly pushing up oil prices. This is the core logic behind the market's ongoing pricing of geopolitical risks.
In addition to geopolitical factors, declining crude inventories have also provided important support for oil prices. According to a report released by the US Energy Information Administration on Thursday, US crude inventories fell by 9 million barrels, influenced by increased refinery utilization rates and higher exports. This larger-than-expected inventory draw further strengthened market expectations for near-term supply tightness, partly offsetting downward pressure from profit-taking.
Despite support from geopolitical risks and positive inventory data, multiple bearish factors are also limiting the upside for oil prices, leading to significant market divergence. A senior market analyst pointed out that after multiple rounds of failed US-Iran nuclear talks, market focus has shifted to Middle East tensions, but investors are still debating whether this will lead to actual turmoil. The head of commodity strategy at Saxo Bank also noted that the market is awaiting a binary outcome from the US-Iran situation, with a strong wait-and-see sentiment prevailing, making a观望 stance likely for Friday.
Specifically, bearish factors are mainly concentrated in three areas: first, concerns about the Federal Reserve's interest rate path; recent Fed meeting minutes suggest rates will remain stable, with further hikes not ruled out if inflation persists, which could dampen crude demand and suppress prices. Second, expectations of OPEC+ increasing production; reports suggest the group is leaning towards restoring production increases starting in April, easing concerns about supply tightness. Third, long-term inventory surplus pressures; analysts note that the oil surplus态势 since the second half of 2025 is still ongoing and likely to continue, requiring a daily production cut of 2 million barrels to avoid excessive inventory accumulation by 2027.
It is important to emphasize that betting on geopolitical events inherently involves high uncertainty and risk. Historical experience shows that without substantive events materializing, oil prices are prone to retreats as upward momentum exhausts and profit-taking emerges. The current slight decline in crude oil is a concrete manifestation of this market characteristic. For market participants, positioning early for geopolitically-driven oil price volatility requires close attention to entry points and risk control, which are core to achieving long-term stable trading.
Based on data from a prediction market on February 19, 2026, the probability of a US strike on Iran before February 28 is below 30%, while the probability before the end of March remains around 60%. This probability change highly aligns with the current escalation rhythm of US-Iran tensions, further confirming the market's pricing logic for geopolitical risks.
Considering the current market situation, the slight decline in W&T Offshore crude, while still reflecting some market expectation for potential weekend geopolitical events, is also influenced by ongoing profit-taking and various bearish factors. A short-term pullback is likely to continue, while the precise timing of any geopolitical event remains difficult to predict. Against this backdrop, the following multi-timeframe technical analysis aims to identify key trading levels for W&T Offshore crude to help market participants improve their trading success rate.
W&T Offshore crude failed to hold above the high from January 29 after testing it, currently trading near $66.30, without forming a valid breakout. This highlights the intense short-term struggle between bulls and bears. The current price is significantly above the 200-day moving average, a key indicator for war risk premium, and is expected to remain above this average in the short term.
Scenario Projections: If US-Iran anxiety intensifies and inventory benefits persist, oil prices could attack the $67.50–$68 resistance zone, but caution is warranted regarding pressure from interest rates and potential OPEC+ production increases. If a geopolitical conflict erupts and the Strait of Hormuz is obstructed, oil prices would quickly break through $70, targeting the $75–$80 range. In the absence of geopolitical news, coupled with rising bearish concerns, oil prices are likely to retreat towards the 200-day moving average, which would represent an optimal entry point. A daily close below $61 would signal large-scale position unwinding, potentially leading to a phased adjustment in oil prices. Combined with long-term surplus pressures, the downside correction space could expand.
On the 4-hour chart, the short-term price action is complex. Overbought RSI conditions and profit-taking are contributing to the slight decline. The failure of a bullish hammer candlestick pattern to sustain itself indicates increased capital divergence and weakening bullish momentum, highly consistent with the current mixed landscape.
In the absence of a geopolitical event, oil prices are likely to extend their pullback, providing opportunities for entry on dips. If key support holds and geopolitical benefits materialize, the target for the 4-hour bullish channel points towards $69.
The current price is hovering near the late-January surge highs, with the RSI in overbought territory, suggesting a high probability of a short-term pullback. Aggressive entries on a pullback could focus on two levels: $65 or $64. In the absence of a geopolitical event, attention should turn to a potential retest of the key pivot zone between $62.00 and $63.40.