On Monday, Brent crude oil (UKOIL) made a powerful surge, rising nearly 11% to reach $83.31. This rally was one of the strongest since the escalation of tensions between the US and Iran in late February. The price bounced off the support zone of $71–$73, indicating a shift in market sentiment.
The key catalyst was renewed strikes between Washington and Tehran, along with White House statements about its intention to take control of the Strait of Hormuz. US military forces carried out hundreds of strikes on Iranian targets, followed by several dozen more on Sunday. According to US Central Command, the main goal is to weaken Iran's ability to attack vessels in the strait.
In response, Tehran launched missiles and drones at US targets in the region and again declared the strait closed, warning vessels to strictly adhere to permitted routes. In peacetime, about a fifth of global oil trade passes through this corridor, and any disruptions here are immediately reflected in prices.
Shipping data already shows a collapse: over 12 hours on Sunday, only nine vessels managed to transit the strait, compared to an average daily transit count of nearly 130 before the military operations began. This creates a supply deficit that the market is pricing in.
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 has led to a sharp rally. South Korean stocks continued to decline, mainly due to a drop in chipmakers.
Technical Analysis: Brent RSI Breaks Resistance
The daily RSI for Brent has risen to 55 and settled above the neutral level of 50. This signals that momentum has shifted to buyers. Previously, the price recovery was constrained by a downward resistance line that emerged after the March RSI peak at 90. Sellers halted the rally 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 above the downward trend line and moved above the neutral zone, confirming the breakout. The signal will turn bearish only if the RSI falls back below 50 and drops under the broken line. Until then, momentum supports the recovery that began from the July low.
Forecast: Key Range $90–$92
From February to May, Brent traded within a large symmetrical triangle, connecting a high near $118 and a low around $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 major resistance lies in the $90–$92 area. This zone served as triangle support in the spring and is now a key confirmation of the downside breakout. If sellers re-emerge here, it will confirm the bearish scenario, and the price could return to $71–$73. If Brent closes the day above $92, it would invalidate the downside breakout and restore the bullish sentiment from the start of the year.
My analysis: The geopolitical premium in the price is likely to persist as long as Iran maintains tensions in the Strait of Hormuz. The $90–$92 range will be decisive for the current recovery: whether Monday's spike becomes a reversal or another lower high. The oil market is now pure geopolitics, with fundamental factors taking a back seat.