Brent Crude Oil Forecast: Prices Hit March High as Middle East Crisis Fuels Rally

Developments surrounding the conclusion of a “nuclear deal” and the shipping regime in the Strait of Hormuz are taking on the character of a complex geoeconomic confrontation with elements of energy and sanctions pressure: the Republican White House administration rejected a three-stage conflict-resolution plan proposed by Iranian authorities, which envisaged the temporary resumption of transit through the strategically important maritime route in exchange for postponing discussions on the nuclear program to a later date, insisting instead on maintaining de facto restrictions until an agreement is reached. Official Tehran, appealing to the rhetoric of economic sovereignty and transit security, describes US pressure attempts as ineffective and politically untenable. Against this backdrop, maritime logistics in the region remain highly volatile: monitoring data recorded an almost complete halt to transit through the Strait of Hormuz; however, on April 28, Bloomberg reported that the LNG tanker Mubaraz passed through the Strait of Hormuz, becoming the first such vessel to cross the waterway since the acute phase of the armed conflict began.

Additional support for Brent Crude Oil quotes came from inventory data from the US Energy Information Administration (EIA): stockpiles fell by 6.2 million barrels to 459.5 million barrels, significantly below market expectations. Meanwhile, the national refining industry processed an average of 16.1 million barrels of crude per day, which is 85.0 thousand barrels per day more than a week earlier, while refinery utilization stood at 89.6%. The market also paid particular attention to export figures: overseas shipments rose to a record 6.44 million barrels per day, while the total volume reached 14.18 million barrels per day; however, gasoline inventories have now been falling for 11 consecutive weeks, which could become an issue ahead of the summer season, traditionally accompanied by increased travel activity in the US.

Overall, the fundamental backdrop favors higher oil prices, as market participants are pricing in risks of energy supply disruptions due to the prolonged military conflict in the Middle East. As long as tensions in the region persist, buyers are likely to retain the upper hand; however, after reaching the 120.0–125.0 dollars per barrel area, oil will probably become more sensitive to fundamental drivers. Signals of de-escalation or increased supply may trigger profit-taking and a correction toward the 105.00 area.

Support and Resistance Levels

The long-term trend is upward: today, market participants managed to renew the March high of 119.15, and if the price consolidates above it, the next targets will be 124.75 and 135.00. Otherwise, a downward correction toward 114.18 may begin, from where long positions could be considered with the prospect of reaching 124.75.

The medium-term trend is upward. This week, the price reached zone 2 (112.22–111.03) and broke through it upward, while the next trend targets will be the ranges of 124.08–122.89 and 137.55–136.22. If a correction develops, the price is likely to reach the levels of 107.02–105.69, after testing which long positions could be considered with the first target at 113.05 and the second at 120.35. To reverse the trend, market participants would need to break through 105.69, after which a test of the 93.69–92.36 area would be likely.

Resistance levels: 119.14, 124.75, 135.00.

Support levels: 114.18, 105.64, 92.67.

Brent Crude Oil Trading Scenarios and Price Forecast

Long positions may be opened from the level of 114.18, with the target at 124.75 and stop-loss at 111.15. Time horizon: 9–12 days.

Short positions may be opened below the level of 111.15, with the target at 105.64 and stop-loss at 113.73.