WTI recovers above mid-$98.00s after gap lower as Hormuz risks offset OPEC+ output hike

• WTI attracts some dip-buying following a modest bearish gap down opening on Monday.
• Rising Iran tensions and Hormuz risks turn out to be key factors supporting the commodity.
• The OPEC+ decision to increase Oil output and a modest USD rebound cap further upside.

West Texas Intermediate (WTI) – the benchmark US Crude Oil price – rebounds following a bearish gap opening to the $96.45 area on Monday, though it sticks to modest intraday losses through the Asian session. The commodity currently trades just above mid-$98.00s, still down over 1% for the day, amid mixed cues.

US President Donald Trump announced over the weekend that the US would begin an effort to free up ships stranded in the Strait of Hormuz. In response, Ebrahim Azizi, head of the Iranian parliament’s National Security Commission, issued a formal warning that any US interference in the strategic waterway would constitute a ceasefire violation. This, in turn, raises the risk of a further escalation of tensions in the region and revives concerns about a further disruption of supplies through the Strait. Apart from this, the lack of progress in the US-Iran peace talks turned out to be a key factor acting as a tailwind for Crude Oil prices.

Meanwhile, the Organization of the Petroleum Exporting Countries and its allies, or OPEC+, agreed to increase oil output for the third consecutive month, by 188,000 barrels per day in June for seven members. Moreover, the emergence of some US Dollar (USD) dip-buying keeps Crude Oil prices in the red for the third consecutive day. Persistent geopolitical uncertainties, along with reviving bets for a rate hike by the US Federal Reserve (Fed), support the Greenback. This warrants some caution before confirming that the recent pullback from a nearly two-month high, touched last Thursday, has run its course.