Oil Price Analysis

Oil from a Fundamental Perspective

Oil prices rose following the closure of the Strait of Hormuz over the weekend, reigniting concerns about inflation. 

Oil prices rose by more than 5% as restrictions on navigation through the Strait of Hormuz persisted, and after the U.S. seized an Iranian-flagged vessel over the weekend, which led to a decline in confidence in diplomatic progress. 

West Texas Intermediate crude rose to $92 before returning to trade around $90 per barrel.

Disruptions to oil supplies increase the likelihood of inflation driven by rising energy prices and interest rate hikes by major central banks in the coming months.

Oil prices are once again experiencing sharp volatility due to developments in the Middle East, where what appears to be a de-escalation quickly turns into a new escalation, and vice versa.

U.S. negotiators are scheduled to arrive in Pakistan later on Monday for a new round of peace talks, although Iran has not yet confirmed its participation in any negotiations.

Oil from a Technical Perspective

Oil prices rose sharply today toward $92 before trading around $90 per barrel.

Crude oil retreated as we expected at the end of last week’s trading from $95 per barrel, hitting our first target at $87 per barrel and reaching $82, and we were very close to reaching our final target.

As we mentioned here

Currently, oil remains poised to decline in the near and medium term, targeting $87 again and then $81 per barrel.

This scenario would fail if prices break above $96.50.