Brent prices have done nothing but decline over the past week. They traded at $70 per barrel, down nearly 40% from yearly highs. The main sources of pressure were the significant improvement in oil shipping through the Strait of Hormuz and the reduced concern over Middle East crude exports. The market had previously priced in the very real risk of supply deficits, but once logistical issues were resolved, those fears partially faded. Another headache is the prospect of higher global fuel output. The Organization of the Petroleum Exporting Countries (OPEC) remains determined to increase production as early as August, reinforcing worries that the crude market could become well balanced—or even oversupplied.
Revised outlooks from major banks are also weighing on Brent oil. UBS was one of the first to predict lower prices, citing the reopening of the Strait of Hormuz to shipping and the consequent de-escalation of geopolitical tensions. This is a critical signal for the market. If large players revise their forecasts downward, speculative interest could weaken. In this scenario, even short-lived rebounds would likely be used for profit-taking and building new short positions.
Taken together, these factors suggest that bears remain firmly in control. Sluggish demand by the world’s key consumers, restored fuel exports from Persian Gulf countries, and lower future price targets all point to a clear shift—from deficit fears to oversupply concerns.
The final recommendation:
— Sell Brent crude at the current level of $72 per barrel, aiming for $65 within a couple of weeks.
— Place a Stop Loss order at $75, just above resistance, for better risk management if the market moves against us.
This content is for informational purposes only and is not intended to be investing advice.
