Oil’s Relentless Rebound: Why Energy Bulls Aren’t Waiting for the Strait of Hormuz to Reopen

If you’re looking for a market that refuses to die, oil is serving up a masterclass in resilience. While the fragile U.S.-Iran ceasefire is already showing cracks, and the Strait of Hormuz remains choked, crude prices are grinding higher, again. The latest tick puts oil back near $97, a level that seemed unthinkable just a few months ago when recession doomers were calling for $60 handles. Energy traders are clearly not buying the peace narrative, and the tape is telling you why: supply is still throttled, and the risk premium isn’t coming out until tankers are actually moving.

The news cycle is a carousel of geopolitical drama. The Wall Street Journal reports marine traffic through the Strait of Hormuz is still throttled, and Iran’s plan to charge tolls for passage has turned the world’s most important waterway into a financial battlefield. Former Boston Fed President Eric Rosengren told CNBC that as long as the Strait stays restricted, the risk of an oil supply shock remains live. The ceasefire headlines may have juiced a relief rally in equities, but oil traders are not so easily fooled. The price action says it all: every dip is getting bought, and the market is pricing in a risk premium that refuses to fade.

This isn’t just about geopolitics, though. The macro backdrop is a slow-motion train wreck for energy bears. U.S. inflation may be receding, but Americans are still fuming about the cost of living, especially at the pump. The Fed is stuck in a holding pattern, with small businesses screaming that policymakers aren’t listening (per QI Research’s Danielle DiMartino Booth). Bond yields are drifting lower, but oil is ignoring the usual cross-asset signals. The correlation between crude and the S&P 500 has broken down, and the energy sector is quietly outperforming as the rest of the market dithers.

Let’s talk positioning. Commodity ETFs like DBC are stuck in neutral, with DBC printing $28.57 for the fourth straight session. But under the hood, the flows are telling a different story. Institutional players are rolling out of broad commodity baskets and into pure energy plays, betting that oil’s upside isn’t done. The options market is pricing in higher volatility, with skew favoring calls over puts, a classic sign that traders are hedging for a breakout, not a breakdown.

Historical context matters here. The last time the Strait of Hormuz was this restricted, oil spiked over $100 in a matter of weeks. The current setup is eerily similar: supply is tight, demand is sticky, and the risk of an exogenous shock is rising. The difference now is that the market is more sophisticated, with algos sniffing out every headline and liquidity thinner than ever. That means moves can be violent, and the pain trade is still higher.

The technicals are lining up for another leg up. Oil is consolidating just below $97, with resistance at $98 and support at $94. The 20-day moving average is rising, and momentum indicators are flashing bullish. Volume is picking up, and the order book is thin above $98, a breakout could trigger a fast move to $102 if the right headline hits. The risk is that a sudden de-escalation in the Middle East could unwind the premium, but so far, the market is not betting on peace.

Strykr Watch

Here’s what matters for energy traders. DBC is locked at $28.57, but the underlying oil futures are coiling for a move. The $97 level is the pivot. A close above opens the door to $100, with $102 as the next target. Support is at $94, and a break below would invalidate the bullish setup. Watch for volume spikes on any ceasefire headlines, these are your cues for positioning. The RSI is at 66, not yet overbought, but getting close. Options skew is favoring calls, so the market is bracing for upside. If tanker traffic resumes, expect a knee-jerk selloff, but until then, the path of least resistance is up.

Risks are obvious but worth repeating. If Iran and the U.S. actually stick to the ceasefire, and the Strait reopens, the risk premium could evaporate in hours. A surprise SPR release or OPEC quota hike would also kneecap the bulls. But as long as supply is constrained, and the headlines stay ugly, the tape favors higher prices.

Opportunities abound for nimble traders. Buying dips toward $94 with stops below $93 offers a tight risk/reward. Selling upside calls above $102 could pay off if the move gets overextended. For ETF traders, DBC is a laggard, but a breakout above $29 could signal the next leg higher. Just don’t get married to your position, the tape can turn on a dime in this market.

Strykr Take

Oil’s resilience is a lesson in market psychology: when everyone is waiting for peace, the real money is made betting on chaos. The risk premium isn’t coming out until the Strait is open and tankers are moving. Until then, energy bulls have the upper hand. Watch the tape, respect your stops, and don’t fade the pain trade, the squeeze could have further to run.