Higher supply and weaker demand is likely to push Brent into red zone by weekend

Brent prices are currently dancing around $75 per barrel, preparing to close the week roughly 7% lower. This decline was triggered by the swift recovery of supply chains in the Persian Gulf after the United States and Iran signed a temporary peace agreement that unblocked the Strait of Hormuz to shipping.

A short-term oversupply has recently emerged due to massive crude flows. In just twenty-four hours, around 20 million barrels passed through the waterway. Furthermore, Saudi and Qatari oil exports have recovered following a multi-month halt. The physical market reacted by moving into contango across key benchmarks, while Asian buyers—including Chinese refineries—were flooded with so much fuel that they began reselling these volumes. Angolan grades have seen record discounts, confirming that regional demand is failing to keep pace with rising supply.

Yesterday’s short-lived price rebound was driven by the temporary suspension of ship evacuations following an incident involving a cargo vessel off the coast of Oman. But today, oil is declining again. Peace negotiations between Washington and Tehran continue, with the US dismissing the idea of paying fees to pass through the Strait of Hormuz. Besides, authorization to sell Iranian fuel that has already been shipped is adding volumes to the market. The fundamental picture has recently screamed about a rising supply-demand imbalance.

On the technical side, Brent crude is now hovering around fresh lows within a broader downtrend. The Moving Average of Oscillator (OsMA) remains in negative territory, confirming that short-term bearish momentum is still intact. However, shrinking column heights suggest that selling pressure has eased. The Chaikin Oscillator also points to ongoing capital outflows, though its slight upward tilt may indicate weakening bearish momentum—potentially setting the stage for a consolidation close to current lows in the near future.

Consider the following trading strategy:

Sell Brent crude at $75.07, with Take profit at $70.00 and Stop loss at $78.30.

The forecast is valid from June 26 till July 3, 2026.