Crude oil prices are struggling to hold gains on Thursday despite a significant escalation in geopolitical tensions between Iran and the United States, with WTI (West Texas Intermediate โ the US benchmark crude price) pulling back below the $90 per barrel level.
The limited upside is notable. Ordinarily, a direct exchange of attacks between Iran and the US would be enough to send oil sharply higher, given Iran’s role as a major OPEC producer and its strategic position near the Strait of Hormuz โ a critical chokepoint for global oil supply. The muted price response suggests traders are either sceptical the conflict will escalate further or are already pricing in some risk premium from prior sessions.
Why This Matters for Australian Traders
For ASX-listed energy stocks, a sustained move above $90 in WTI would typically be a tailwind for companies with oil exposure including Woodside Energy (WDS) and Santos (STO). The current failure to hold above $90 may cap near-term upside for those positions.
Australian traders holding AUD accounts should also note that oil price weakness can weigh on the AUD indirectly โ commodity currencies tend to soften when key resource prices retreat, particularly if risk sentiment deteriorates alongside it.
What to Watch Next
The key level to monitor is whether WTI can reclaim and hold above $90. A confirmed break higher โ especially if Iran-US tensions worsen โ could re-energise ASX energy names and provide short-term support to the AUD/USD. Conversely, if prices continue to fade despite the geopolitical backdrop, that bearish divergence would be a warning sign for energy bulls.
Directional bias: Wait-and-see. The geopolitical risk is real, but the market’s muted reaction to Iran-US hostilities suggests limited conviction on the upside. Watch the $90 level closely before adding oil or energy stock exposure.
Source: FX Street