Crude Breaks Higher as Strait of Hormuz Risk Builds — Is $100 Oil Next?

After falling in the early hours of the overnight session, Crude has bounced back and punched above the highs.

As week 1 of this war comes to a close, Iran maintains their ability to retaliate. The strikes on neighboring countries, especially Qatar (LNG) and Saudi Arabia (production) caught traders off guard Monday – and the West’s inability to keep the Strait of Hormuz open and safe as we end the week is catching some off guard as well.

The longer that Strait remains close, there is a compounding effect relative to price as a good chunk of the tanker fleet remains trapped.

Updates from yesterday’s note into the open include a strike on Bahrain’s only refinery (minimal damage) my last note into today include Bahrain’s only refinery, Kuwaiti refinery shut-ins (storage capacity full – trapped tankers), and most importantly, the Chinese government’s order to cease Diesel and product exports yesterday.

Chinese refiners produce the majority of the world’s bunkering fuel (shipping) and industrial pet-chem liquids. This export block by the CCP will pressure CME Heating Oil (Diesel) prices sharply today. Diesel cracks had already ripped to 2yr highs into yesterday’s open. This added pressure will create a short burst of “Refine baby Refine” for US energy majors.

Yesterday, we warned that $100 was becoming increasingly probable – which is aggressive. But, this is not Venezuela, and an elongated conflict should be assumed. If Chinese export blocks remain in place through next week – upwards pressure on Diesel markets is going to escalate quickly.

Spreads will show you the way here –

WTI Prompt Spread: $3.04/bbl +2,361% this week

WTI Diesel Crack: $57.33/bbl +87.64%

Weekly Technical History:

Monday 2/16- Holding of the 62.57*** level is key today. Risk is still skewed to the upside. Volumes and volatility are likely lighter today on holiday volumes.

Wednesday – Price action was disappointing, but held support at 61.85***. Headlines throughout the day may provide for better entry than this morning, liquidity remains scarce pre US open.

Thursday – Favored profit taking and shaving near 66.04*** level.

Friday – Yesterday’s rally punched out above the local 65.48*** high (01/29/26), and the longer-term high of 66.04*** (07/30/2025). The overnight high of 66.79 into 66.90 is a key region to watch through the US session.

Friday = With the ball in Iran’s court on negotiations, risk for the day looks tilted to the downside. Our Iran catalyst we began playing around 60.00 is mainstream chatter now and risk-premium within futures has been added with velocity. Some retraction on “positive” Iran rhetoric could come through the weekend.

Tuesday – Yesterday’s high of 67.05 should be watched closely today. Iran is still up in the air and the strait of Hormuz closure still presents an upside catalyst. Risk is skewed to the upside, but some profit taking up at these levels is prudent for the customers long since the 60.00 level.

Wednesday – CL held the lows of 65.24 yesterday, and is rallying today despite the OPEC+ headlines. Iran based buying is still the main catalyst driving this market. But, be aware of these OPEC+ headlines weighing on markets.

Thursday – We’re trading into key support this morning around the 64.40 level, a break here could trigger further downside unless a new and bullish catalyst comes into the picture.

Friday – The new bullish catalyst needed was introduced overnight / this morning with the leave country order for US citizens in Israel and war between Pakistan and the Taliban. If a breakout is confirmed through the US open, we’re looking at a pretty bullish setup

Monday – Holding of 70.00 is the key. We are in the process of establishing a new range accelerated volatility is likely. The initiation of new long positions should be done with prudence. The Iran war premium has been building for some time, but strikes on allies is new information.

Updated Technical:

We maintain our key levels from yesterday and again highlight the increasing probability of seeing $100 WTI as we cautioned yesterday.