Monday marked a powerful surge in the oil market. Brent (UKOIL) futures jumped nearly 11%, reaching $83.31. This momentum was one of the strongest since late February, when the escalation between the US and Iran began. The market instantly reacted to the worsening geopolitical situation in the Persian Gulf region.
Trump's Plan and the Strait Blockade: What Happened?
American military forces carried out hundreds of strikes on Iranian targets, with several dozen more on Sunday. The official goal is to weaken Iran's ability to attack vessels in the Strait of Hormuz. In response, Tehran launched missiles and drones at US targets, and Iranian authorities again declared the strait closed, warning vessels to strictly adhere to permitted routes.
Pressure from the US intensified amid statements about the intention to take direct control of the strait. In peacetime, about a fifth of global oil trade passes through this corridor. Shipping data already shows a collapse: in 12 hours on Sunday, only nine vessels managed to transit the strait, whereas before the start of military operations, the average daily number of crossings approached 130.
Stock markets are reacting in divergent directions. Japanese stocks lost 82 trillion yen over three weeks, and the Nikkei 225 index fell nearly 2% on Monday. For oil contracts, conversely, the reassessment of risks resulted in a sharp rise, while South Korean stocks continued to decline—mainly due to a drop in chipmakers.
Technical Analysis: Brent RSI Breaks Resistance
The daily RSI for Brent rose to the 55 level and consolidated above the neutral level of 50. This is a signal that initiative has shifted to buyers. The recovery in oil prices was previously constrained by a downward resistance line that emerged after the March RSI peak at 90. Sellers halted growth three times—in May at 64 and 58, and in June at 46.
At the end of June, the momentum indicator dropped to 27, entering near oversold territory. In early July, the RSI finally broke through the downward trend line. Now, the signal will only turn bearish if the RSI falls back below 50 and drops under the broken line. Until this happens, momentum supports the recovery that began from the July low.
Brent Price Forecast: Key Range $90–$92
From February to May, Brent moved within a large symmetrical triangle, connecting a high around $118 and a low near $91. At the end of May, the price broke down from the triangle and by early July fell to support at $71–$73. This zone held. Buyers formed a base there over two weeks, and Monday's session allowed the price to rise higher. Brent opened near $78 and reached a high of $83.54 during the day—a gain of 10.76% at the time of publication.
The next significant resistance is in the $90–$92 area. In the spring, this zone acted as triangle support, and now it has become a key confirmation of the downward breakout. If sellers become active here again, it will confirm the bearish scenario, and the price could return to $71–$73. If Brent closes the day above $92, it will cancel the downward breakout and restore the bullish sentiment from the start of the year.
The geopolitical risk premium on the price is likely to persist as long as Iran continues to maintain tension in the Strait of Hormuz. The $90–$92 range will be decisive for the current recovery: whether Monday's surge becomes a reversal or another lower high.
My expert assessment: The oil market right now is a pure geopolitical narrative. Fundamental supply and demand factors have taken a back seat. As long as control over the strait remains in question, Brent will trade with a risk premium. However, if the situation de-escalates, we could see an equally sharp pullback. Investors should be prepared for high volatility.