Brent prices are currently hovering around $101.30 per barrel. Yesterday, escalating geopolitical tensions in the Middle East pushed oil up by 4%, with concerns over a crude deficit remaining very much acute due to the blockage of the critical energy route through the Strait of Hormuz.
Over the past few days, the transportation situation has worsened again. After a series of tanker attacks, shipping through the Strait has slowed to a near standstill. The risk of further disruptions, which could damage vessels and energy infrastructure, remains a major obstacle to recovering supply chains. This maintains elevated premiums on crude.
Note that oil has not one but several aces up its sleeve, including OPEC’s decision to keep current production quotas unchanged for November. However, actual output from some members of the alliance remains far below established targets due to severe export troubles. What does this mean? No quick increases from major producers should be expected in the near term.
Inventory dynamics also indicate a continuing shortage. According to the latest data from the Energy Information Administration (EIA), US commercial oil stockpiles fell by 3.2 million barrels, even though analysts had expected them to increase.
So, where does this leave us? The technical setup suggests Brent crude could rally further. After touching the $104 level, prices entered a local correction and are now testing the 60-day exponential moving average (EMA 60), which serves as dynamic support. The next upside target could be $106 per barrel—the mid-September high.
The final recommendation:
— Buy Brent crude at the current price of $101.30, aiming for $106.00 within a couple of weeks.
— Place Stop Loss at $98.00 to manage risks if the market moves in the opposite direction.
This content is for informational purposes only and is not intended to be investing advice.
