At the moment, the price of Brent is sitting around $98.50 per barrel, with the psychologically critical $100 level staying nearby.
A full recovery of shipping through the Strait of Hormuz has yet to happen. Consequently, exports from the region remain unstable. Persistent risks of further attacks on tankers and oil infrastructure make matters even worse. Such conditions prevent producers from quickly ramping up output. Over the coming months, a full normalization of exports through this key global energy route appears unlikely. As a result, the shortfall must be offset by drawing down inventories.
According to the head of Saudi Aramco, the oil market has lost roughly 3 billion barrels since the start of the Middle East crisis. Add to that another billion barrels withdrawn from stockpiles. Restoring such a loss could take a couple of years. Even a gradual improvement in logistics will not quickly resolve the shortage issue. All of these factors push Brent prices higher.
Another tailwind comes from the Organization of Petroleum Exporting Countries (OPEC). Despite elevated quotas, actual output by Gulf countries remains well below pre-conflict levels. In August, seven key members of the alliance produced approximately 5 million fewer barrels per day than they had before the jitters began.
On the technical side, Brent crude has been moving within an uptrend since late June, forming higher lows and peaks. Quotes are now hovering near channel support, creating a good buying opportunity. The next target could be the $115-per-barrel level.
The overall recommendation is to buy Brent crude at the current price of $98.50, aiming for $115 within one month. To mitigate the risk of adverse market movements, place a Stop Loss order at $95.
This content is for informational purposes only and is not intended to be investing advice.
