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Brent crude oil price analysis after Iran’s attack on Israel

By: Invezz
oil price outlook rbc helima croft

Brent crude oil price will be in the spotlight on Monday morning as investors react to the ongoing geopolitical risks in the Middle East. The price ended the week at $90.15, a few points below the year-to-date high of $92.07. It is now hovering at its highest level since October 2023.

Iran’s attack on Israel

The biggest catalyst for the recent Brent crude oil price surge is the rising geopolitical risks in the MIddle East. Its price action accelerated after Israel attacked an Iranian consulate in Syria, killing several senior officials. 

Now, as widely expected, Iran has retaliated, firing over 200 missiles and drones to Israel. Most of these missiles have been intercepted and there have been no reported deaths yet.

At the same time, Iran has intensified its actions at the Strait of Hormuz, the most important artery in the oil industry. On Saturday, the country’s military intercepted and captured a ship associated with Israel.

Therefore, more escalation could lead to higher crude oil prices. However, the reality is that no side wants an escalation. In a statement, the Permanent Mission of Iran to the UN, said that the ‘matter was now concluded.”

Conducted on the strength of Article 51 of the UN Charter pertaining to legitimate defense, Iran’s military action was in response to the Zionist regime’s aggression against our diplomatic premises in Damascus. The matter can be deemed concluded. However, should the Israeli…

— Permanent Mission of I.R.Iran to UN, NY (@Iran_UN) April 13, 2024

There are three main reasons why the price of crude oil will not rise sharply when the market opens on Monday. And if it does, there is a likelihood that the surge could be short-lived.

First, Iran’s attack on Israel was priced in by market participants, which explains why it has jumped sharply in the past few weeks. 

Second, the attack was not as strong as anticipated since most drones and missiles were intercepted by Israel and the United States.

Finally, I suspect that these sides don’t want more escalation. Israel is involved in a prolonged escalation in Gaza while the United States has an election coming up. Iran has always insisted that it sought no violence and that it only attacked because Israel bombed its consulate.

Brent crude oil price forecastBrent crude oil

Brent chart by TradingView

Turning to the daily chart, we see that the price of Brent has been in a strong bullish trend in the past few months. After falling to $72.41 in November, it has rebounded to over $90 today. It has remained above the 50-day moving average and formed a bullish flag pattern.

The Relative Strength Index (RSI) has continued rising and is now at its overbought level. Therefore, I suspect that we will see a big pop on Monday followed by a pullback to the crucial support at $87.60, its highest swing on March 19th.

The post Brent crude oil price analysis after Iran's attack on Israel appeared first on Invezz

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