WTI slips below $90.50 despite rising Middle East supply risks

West Texas Intermediate (WTI) oil price edges lower and is trading around $90.40 per barrel during Asian hours on Tuesday. However, crude oil prices may regain ground as Iran vowed to strike energy infrastructure across the Middle East in response to further United States (US) attacks on its assets, marking the latest escalation in a conflict that has sharply reduced regional oil supply.

Oil prices surged nearly 10% last week as renewed fighting raised fears of deeper energy disruptions, with both sides stepping up attacks over the weekend on ships and military vessels around Hormuz. Saudi Aramco‘s facilities in Jazan near the Red Sea were targeted again on Monday, though damage remained limited. Additionally, Iran announced that an agreement with Oman to manage shipping through the Strait of Hormuz is nearing completion, fueling concerns over Tehran’s growing control of the key waterway.

Compounding these supply risks, the United States, the world's largest oil producer and consumer, is facing tight domestic inventory levels. Reuters cited PVM Energy analysts, noting that US stocks of gasoline and distillate fuel are substantially below year-ago and five-year seasonal averages, indicating a slightly direr picture than just a few weeks prior.

Despite these heightened geopolitical and supply risks, oil continues to flow out of the Persian Gulf, with roughly 7 million barrels a day of crude and refined products currently passing through the Strait of Hormuz.

Analysts at Societe Generale argue that the current uptrend in Brent remains intact, noting that “signals of a large pullback are not yet visible.” They add that “last week's low near $89 could provide short-term support,” reinforcing their view that downside risks appear limited for now.