Brent prices have declined over the past few days, weighed down by rising hopes of a peace deal between the United States and Iran regarding the fate of the Strait of Hormuz.
But the feast did not last long. On May 25, Tehran announced that no clear arrangements had been made yet and any potential agreement was still being considered. The two parties failed to reach a consensus on the nuclear program and the continuation of the ceasefire. As a result, the talks could drag on or even collapse. If the worst-case scenario materializes, a global oil deficit is likely to be the world’s headache for quite some time.
A blockade of the Strait of Hormuz triggered energy supply disruptions from Gulf countries, a drop in reserves, and a decline in oil production. Even a partial reopening of this route could take weeks, if not months, before shipping lanes are fully restored. At the same time, demand remains robust due to the regular summer boost in gasoline and jet fuel consumption, making the shortage issue more and more acute.
Brent prices are now hovering around $100 per barrel. However, another geopolitical storm in the region could swiftly push them to the $107–$110 range.
The final recommendation:
— Buy Brent crude at the current price, with a $107 target within a couple of weeks.
— Place Stop Loss at around $97.50, just below the support level, to manage risks if the market plays against us.
This content is for informational purposes only and is not intended to be investing advice.
