WTI crude oil is caught in a tug-of-war between a geopolitical risk premium and expectations of weak demand. A stalemate in the Strait of Hormuz, an escalation in the Lebanon conflict, and attacks on Russian refineries provide short-term support for oil prices. However, both the IEA and OPEC have cut their demand forecasts, and increased supply from non-OPEC+ acts as a mid-term headwind to the fundamentals. If tensions in the Middle East further escalate, oil prices may break out of the current range and move higher to challenge the $86–90 area. If there are signs of easing geopolitical risks or demand concerns continue to intensify, oil prices could retrace toward deeper support at $81.60 and even $73.10. Traders are closely watching Tuesday’s API crude oil inventory report to look for further clues on the demand side. Going forward, key areas to monitor include developments in US-Iran negotiations, the status of navigation through the straits, domestic refinery run rates, and changes in inventories. Due to geopolitical risk disruptions, it is expected that domestic crude oil futures may maintain a choppy-to-firm trend this week.

Key levels: Resistance: 84.6, 86.0 Support: 80.7, 79.5