Over the past couple of weeks, the Brent market has been rather volatile. At first, prices slid from $114 to $93 per barrel, weighed down by rising expectations of long-awaited progress in the US-Iran peace negotiations. Then, they rebounded to $100 on the news that the talks had been put on hold once again, leaving the shipping route through the Strait of Hormuz at risk. The geopolitical premium remains the key driver behind Brent's rally.
On the fundamental front, global oil supply is still under significant pressure. In May, US crude exports reached a record 5.6 million barrels per day (bpd)—clear evidence of the strain. European and Asian refiners have been searching for alternative deliveries due to the blocked Strait of Hormuz. At the same time, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) may continue to increase their production targets by about 188,000 bpd in July. The question is whether this will make any real difference.
Meanwhile, shortage risks are present, and the market remains vulnerable to logistical disruptions.
As for demand, the picture is quite murky. Elevated energy prices and weakness in certain consumer segments, including aviation fuel and petrochemicals, are currently limiting Brent’s upside potential. Some of this pressure stems not only from a temporary decline in inventories but also from an actual drop in consumption in a few regions. Still, in most countries, fuel stockpiles have been falling for many consecutive weeks, and the summer driving season continues to support demand for petroleum products.
The ultimate recommendation is to buy Brent crude at the current price, targeting $102 per barrel within a month. To mitigate the risk of adverse market movements, place a Stop Loss order just below the support level, at $93.
This content is for informational purposes only and is not intended to be investing advice.
