Crude oil’s crucible: waiting for a break in the blockade or the economy

Ceasefire deadline and supply risk collide

Oil markets continue to ride a wave of headline‑driven volatility as the conflict involving Iran enters its eighth week. Western Texas Intermediate (WTI) crude oil closed higher overnight at $87.80, posting a solid 4.71% gain and extending its rebound from Friday’s low of $78.97.

The gains came as markets reopened following the weekend’s sharp re‑escalation in Middle East tensions. However, Monday’s rally was more contained than many had feared, particularly after the United States (US) reinforced its naval blockade by seizing an Iranian‑flagged cargo ship attempting to breach the line near the Strait of Hormuz.

Traders appear to be balancing renewed geopolitical risks against persistent hopes that diplomacy could still deliver an extended, or even permanent, ceasefire deal. The current two‑week ceasefire officially expires on the evening of Wednesday, 22 April Washington time, translating to roughly Thursday, 23 April at 10.00 am AEST.

The probability of such a deal, however, was made no clearer by a host of mixed headlines hitting the wires overnight as both sides jockeyed for position at the negotiating table.

Headline whiplash leaves oil prices searching for direction

The world, meanwhile, remains transfixed as a spectator, watching for any sign of a break, whether that is the blockade of the Strait finally giving way, or economies beginning to buckle under the strain of the energy supply shock. Which of those outcomes emerges remains to be seen.

On Iran’s side, the president stated that war is in no one’s interest, while officials in Tehran noted that no decision has yet been made on the next round of US negotiations. They also voiced a clear lack of trust over alleged ceasefire violations and confirmed they are reviewing a US proposal delivered via Pakistan.

Conversely, on the US side, President Trump struck a firm tone. He warned that ‘bombs will go off’ if the ceasefire expires and called an extension ‘highly unlikely’, while reiterating that the Strait of Hormuz would remain closed by the US naval blockade until a deal is signed.

These mixed signals have left crude oil caught like a rabbit in the headlights. Prices remain supported by the very real threat of prolonged supply disruption through the Strait of Hormuz, yet capped by hopes that cooler heads might still prevail and prevent a deeper escalation.

A breakthrough before the deadline would likely see prices give back all, and potentially more, of this week’s gains very quickly. Failure to find common ground, however, risks a rebound above $95 as the reality of tighter supply begins to bite harder.

Traders will remain glued to every headline between now and then, with the AEST timing expected to add an extra layer of tension for Australian markets this Thursday morning.

Crude oil technical analysis

At the beginning of March, WTI crude oil broke decisively out of its long‑standing $55 - $65 range, surging to a high of $119.48 on 9 March before retracing much of that move.

Somewhat worryingly, the correction that followed appears to have traced out a three‑wave ‘abc’ Elliott Wave pattern from the $119.48 high down to last week’s $78.97 low.

While technicals will undoubtedly play second fiddle to this week’s geopolitical developments, it is worth noting a couple of key levels.

If crude continues to hold support in the $79 - $76 area and then decisively reclaims resistance at $93 on a sustained basis, it would imply that a retest, and potential break, of the $119.48 high is underway.

A sustained break above the $119.48 high would then set up a test of the $130.50 high from March 2022.

Crude oil daily candlestick chart

• _{Source: TradingView. The figures stated are as of 21 April 2026. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}