Brent is under pressure amid production increases and looming resistance

Brent crude opened at $68.69 on Friday, September 26, and has been hovering around this level since. The recent rally was driven primarily by escalating geopolitical tensions in Eastern Europe, associated energy infrastructure challenges, and Russia’s retaliatory fuel export restrictions. This environment has reinforced market concerns over reduced output of refined products, boosting oil quotes up to current levels.

However, headwinds are emerging. The price increase is now partially offset by expected supply growth from Iraqi Kurdistan, where exports may resume as early as this Saturday. Initial volumes could be around 230,000 barrels per day (bpd), potentially rising to 500,000 bpd. Such a surge in supply exerts considerable pressure on the cost of crude.

Meanwhile, the technical setup is ambiguous. On the daily chart, Brent is in an uptrend, confirmed by the rebound from a local weekly low of $65.35 to the current $68.69. The RSI (14) at 63 suggests moderate bullish momentum without overbought conditions, and the On-Balance Volume indicator signals that buyers are accumulating positions during the recovery. However, Brent prices are now approaching a key resistance at $69.10. This level has not been breached yet, creating a risk of a pullback due to technical pressure and probable profit-taking.

If geopolitical tensions remain and the situation with Kurdistan exports proceeds smoothly, the price could retreat to the $67.00–$67.50 range as early as next week, though a drop below $66.00 is unlikely. A break above $69.10 could pave the way to $70.00, but this would require a new significant macroeconomic event. Given that key bullish factors have already been priced in, while bearish risks are mounting, consolidation or a correction remains the most likely scenario.

Consider the following trading strategy:

Sell Brent crude at the current price in anticipation of a correction. Take profit 1: $67.00. Take profit 2: $66.00. Stop loss: $70.00.

This forecast can be referred to from September 26 till October 3.