Brent crude oil price is set to jump sharply when the market opens later today after Donald Trump launched a bombing campaign in Iran. It ended the week at $77, up by 31% above the lowest point in May.
Similarly, the West Texas Intermediate (WTI) benchmark ended the week at $74, also much higher than the year-to-date low of $55.20.
Donald Trump bombs Iran
WTI and Brent crud oil prices have been in a strong upward trajectory in the past few months as geopolitical concerns escalated. These concerns rose after Israel launched a military strike against Iran, one of the most important players in the crude oil market.
This crisis has now escalated after Donald Trump launched a majo strike against top Iranian nuclear energy sites. He launched the “savage” attack against Fordow, Nantanz, and Isfahan, which are highly integral to Iran’s nuclear sites.
Iran has theatened to retaliate against the US and Israel, with Supreme Leader Ayatollah Ali Khamenei warning that such a strike would cause “irreparable damage.”
Iran has several potential ways to respond to these attacks. It could decide to continue its bombing campaign against Israel. Also, the country may decide to attack US assets in the region, which may lead to more attacks from Trump.
Iran and its proxies may decide to close or hinder movement at the Strait of Hormuz, where 25% of all crude oil passes through. In a note, an analyst told Bloomberg:
“This US attack could see a conflagration of the conflict to include Iran responding by targeting regional American interests that include Gulf oil infrastructure in places such as Iraq, or harassing passage through the Strait of Hormuz.”
To offset OPEC+ supply increase
The ongoing crisis in the Middle East will benefit top oil producers like Saudi Arabia and Russia. That’s because these countries have been gradually increasing output in the past few months.
Increasing output at a time when recession odds are elevated helped to push oil prices lower a few months ago. Brent bottomed at $57, while West Texas Intermediate fell to $55.
The only reason why Brent crude oil price surge may be short-lived is if Iran’s response is muted, which is likely. That’s because Iran’s economy is not doing well, while its allies like China and Russia have remained in the sidelines.
Brent crude oil price forecast
Brent chart by TradingView
The daily chart shows that Brent crude oil price bottomed at $58.8, where it formed a double-bottom pattern. It has now moved above this pattern’s neckline at $68.57, its highest point on April 24.
Brent has also moved above the 50-day and 200-day Exponential Moving Averages (EMA), a sign that bulls are in control. Most importantly, it ended the week along the upper side of the descending channel that connects the highest swings since September 2023.
Therefore, the most likely scenario is where the Brent crude oil price surges to a high if $82.56, the highest point on January 17, which is about 6.97% above the current level.
The post Brent crude oil price forecast as Trump bombs Iran appeared first on Invezz