Brent crude is currently trading above $85 per barrel, marking its highest level since mid-2024. Theoretically, given the magnitude of the risks associated with a potential supply crunch, current prices remain relatively subdued.
Since breaking above its downward trendline, Brent has appreciated by approximately $20 per barrel. This upward trajectory mirrors the price action seen in June 2025, when US and Israeli forces targeted Iran’s nuclear infrastructure. At that time, the market correctly anticipated the disruption to be transitory. However, the current calculus is altered by the de facto blockade of the Strait of Hormuz. While we have yet to see a kinetic strike on a specific tanker carrying Saudi, Emirati, or Iraqi crude, crossing this “red line” could catalyze a doubling of the current move.
The oil market has spent months contending with a significant supply overhang—a dynamic that distinguishes the current environment from 2022. Prior to Russia’s invasion of Ukraine, prices were structurally higher, driven not only by geopolitical risk but by the artificial deficit engineered during 2020 and 2021. Ultimately, supply shortages failed to materialize, and the market reverted to a surplus. Today, that oversupply is even more pronounced, explaining the lack of a more violent market reaction thus far, even as the risk of supply curtailment remains acute.
“Excluding the pandemic era, we are currently witnessing the longest and largest period of oversupply in the history of the oil market.” Source: Bloomberg Finance LP, XTB
It is worth noting that following the invasion of Ukraine, prices surged by an additional 40% from the $90/bbl level. In contrast, the current “Iran premium” represents a roughly 20% increase (accounting for the events of the past week rather than the broader risk priced in since the start of the year).
From a technical perspective, Brent is testing a critical resistance level at $85/bbl, which coincides with the 38.2% Fibonacci retracement of the most recent major leg lower. A 40% rally from the base of this move would project prices toward the $100/bbl mark. However, intermediate resistance looms near $90/bbl (April 2024 highs) and $95/bbl (September 2023 highs). A lack of diplomatic progress over the weekend would likely trigger an upside gap at Monday’s open.
Conversely, should a ceasefire be brokered or a return to nuclear negotiations materialize, prices could shed 10% in a single session, returning to pre-invasion levels within a fortnight. For now, such outcomes remain purely speculative.
The June 2025 rally spanned 12 days from trough to peak. A similar cycle may play out if the market follows the “TACO” pattern (Trump Always Chickens Out). President Trump is already signalling that Tehran is open to dialogue, despite his official rhetoric suggesting the invasion could last weeks. If crude prices gape significantly higher on Monday, we may see the President pivot toward de-escalation by mid-week, consistent with previous cycles.
Nevertheless, the clock is ticking. Asia remains desperate for Arabian crude, and the producers themselves are reaching the limits of their onshore storage capacity as tankers remain idle. Failure to resolve the Hormuz blockade by mid-March could mirror the price shocks of early 2022, with potentially draconian consequences for the global economy.
The material on this page does not constitute financial advice and does not take into account your level of understanding, investment objectives, financial situation or any other specific needs. All information provided, including opinions, market research, mathematical results and technical analyzes published on the Website or transmitted To you by other means, it is provided for information purposes only and should in no way be construed as an offer or solicitation for a transaction in any financial instrument, nor should the information provided be construed as advice of a legal or financial nature on which any investment decisions you make should be based exclusively To your level of understanding, investment objectives, financial situation, or other specific needs, any decision to act on the information published on the Website or sent to you by other means is entirely at your own risk if you In doubt or unsure about your understanding of a particular product, instrument, service or transaction, you should seek professional or legal advice before trading. Investing in CFDs carries a high level of risk, as they are leveraged products and have small movements Often the market can result in much larger movements in the value of your investment, and this can work against you or in your favor. Please ensure you fully understand the risks involved, taking into account investments objectives and level of experience, before trading and, if necessary, seek independent advice.
