US West Texas Intermediate (WTI) oil prices are recovering after an intra-session dip during Asian trade and are approaching the $74-per-barrel mark. Prices continue to receive support amid a large-scale escalation of conflict in the Middle East.

On Saturday, US and Israeli forces carried out a coordinated strike on Iran that reportedly killed the country's supreme leader, Ayatollah Ali Khamenei. In response, Tehran launched a series of rockets aimed at US bases and populated civilian areas in Washington's allied states. US President Donald Trump said military actions would continue as long as necessary, intensifying fears of a prolonged conflict in one of the world's key oil-producing regions.

Further support for prices came after the Islamic Revolutionary Guard Corps (IRGC) announced it would halt oil shipments through the Strait of Hormuz — the strategic waterway that carries more than 20% of global seaborne oil flows. A potential blockade of that route heightens concerns about market imbalance and possible export disruptions, pushing prices higher.

Nevertheless, the impact of geopolitical factors is partly offset by OPEC+'s decision to increase production by 206,000 barrels per day, which constrains the upside potential for oil prices.

At the same time, a firmer US dollar — supported by safe-haven demand and a re-pricing of expectations for a more active easing cycle by the Federal Reserve — continues to weigh on dollar-denominated commodities, limiting the bulls' ability to push prices significantly higher. From a technical perspective the bulls' target is the 200-day simple moving average on the weekly chart.

Note that daily-chart oscillators sit in overbought territory, suggesting a near-term correction or consolidation is likely.