Crude oil continues to maintain a bullish structure entering week 11 of the global energy shock, persistently holding more than 70% above the yearly lows and continuing to pressure the global inflation and growth outlook.
As geopolitical risks remain elevated and Hormuz flows stay disrupted, the current structure continues to risk an extension toward the $130+ region in the longer term.
Key Market Drivers
- US crude oil inventories have remained in persistent decline since February 2026, with the latest weekly drawdown reaching -4.3 million barrels.
- Peak summer demand is approaching, potentially adding further upside pressure to an already tight energy market.
- Global energy markets continue operating without an estimated 10–14 million barrels per day tied to Gulf production disruptions.
- The UAE continues progressing on its Fujairah pipeline expansion project, expected to further bypass Strait of Hormuz exposure by 2027.
- OPEC production unwind quotas remain largely constrained while Hormuz disruptions persist, with additional UAE independent output increases also remaining on hold.
- Inflation pressures and bond yields continue reaching multi-year highs, reinforcing the broader stagflationary backdrop across global markets.
Related analysis: EUR/USD, Gold Outlook: Dollar and Bond Yields Surge as Euro and Gold Retreat
Crude Oil Price Outlook: 2 Week Time Frame- Log Scale
Source: Trading view
The following framework remains anchored in the Q2 2026 outlook, reinforcing the importance of long-term technical structures over short-term political headlines.
As of May 17, the broader bias continues favoring the upside while crude oil remains supported above the key psychological $100 region.
Scenario Framework:
- Bearish Scenario:
A diplomatic breakthrough, combined with a close below $91, $88, and $84, would expose prices to the previous rejection zone at $76–$74—the highs of June 2025 during prior Middle East tension. Such a move could signal either:- a deeper structural unwind in crude oil prices, or
- another volatility-driven whipsaw within the broader geopolitical cycle.
- Base Case:
Continued supply disruptions keep crude oil trading within the $91–$115 range. This environment would likely continue:- pressuring bond yields higher,
- sustaining inflation expectations,
- weighing on risk assets and precious metals.
- Bullish Scenario:
A sustained breakout- above $108 (the trendline connecting lower highs since the year’s extreme),
- $115-$118 (year's high)
risks extending prices toward $135 and $157, aligning with the 0.786 and 100% Fibonacci extensions of the 2020–2022–2026 price cycle, placing the indicator without the extended wicks on the monthly time frame.
Conclusion
While headlines continue driving short-term volatility, sustained price closes and long-term structural levels remain the more reliable indicator of crude oil’s dominant trend.
So far, the bullish structure remains intact above $100, with geopolitical premiums, disrupted Hormuz flows, and tightening supply conditions continuing to support upside risks into the coming weeks.
Written by Razan Hilal, CMT
Follow on X: @Rh_waves
