Crude oil prices steadied and moved higher on Monday, as traders weighed key technical levels against ongoing geopolitical risks around the Strait of Hormuz. A new round of crossfire between the U.S. and Iran over the weekend was followed by an agreement to halt attacks, providing a brief respite for a fragile, temporary ceasefire.
As of Monday's update, Brent crude futures traded at approximately $72.48 per barrel, up about 0.68%. West Texas Intermediate crude was at $70.03, gaining roughly 1.2%. This follows a week where Brent fell 10.6%, marking its third consecutive weekly decline and bringing prices near pre-conflict levels.
Technical Analysis and Key Levels
From a technical perspective, WTI crude found support in the $68 to $69 gap area, a zone that also sits close to its 52-week moving average. Analysts note this region has become a crucial defensive line for market bulls and bears. If prices can hold above this support level, it could set the stage for a rebound toward the $78 resistance level. Conversely, a decisive break below this support could see the next downside target around the $55 mark.
Geopolitical Factors and Supply Concerns
On the geopolitical front, an attack on a Qatar-bound very large crude carrier near the Strait of Hormuz last Thursday triggered a new round of retaliatory strikes between the U.S. and Iran. Although both sides reached an understanding to pause attacks on Sunday and plan to continue talks in Doha on Tuesday, the market remains cautious about the pace of supply recovery. Some analysts point out that physical flows are still constrained by a backlog of tankers, damaged infrastructure, and production shutdowns, suggesting supply may not approach pre-conflict levels until near the end of the year.
Other market observers warn of the risk of excessive optimism. Should supply recovery proceed slower than anticipated, oil prices could face significant upward pressure. The immediate direction for crude prices is seen as heavily dependent on whether the 52-week moving average holds as support and on the actual evolution of the situation in the Strait of Hormuz.
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