Crude oil prices continued the upward trend, reaching its highest level since May 20 as the crisis in the Middle East gained momentum. Brent, the global benchmark, rose to $110, while West Texas Intermediate (WTI) moved to $99.05, well above its July low of $67.
Iran continues to shoot ships
Brent and West Texas Intermediate continued to rise as Iran escalated tensions in the Middle East. The Iranian Revolutionary Guard Corps (IRGC) continued shooting ships attempting to cross the Strait of Hormuz last week.
Reports by the UKMTO show that this process continued during the weekend, when the corps targeted at least four ships. In total, it has shot down tens of ships in the past few weeks, and this trend will continue towards the midterm elections.
Notably, Iran has continued to fire on ships, while the Trump administration has stopped retaliating. Trump likely believes that a military response would only prompt further escalation from Tehran.
There is also a risk that Trump will escalate in the coming weeks as the US heads to the midterm elections. Some officials inside the administration suggest that escalation will lower oil prices, something that most analysts say is not accurate.
Oil prices have also jumped as the crisis between Saudi Arabia and the Houthis continue. Houthis have continued their attacks against Riyadh, pushing Mohamed bin Salman to shuttle between bunker palaces. The fear is that Houthis will use ballistic missiles and drones to target him directly.
These events mean that oil flows from the Middle East will remain under pressure in the foreseeable future. This trend will change only when these wars end, which might not happen anytime soon.
Trump has attempted to lower oil prices by waiving sanctions against Russia. The challenge, however, is that Russia is facing its own challenges, with Ukraine continuing to shoot refineries.
With the relationship between Trump and Volodymyr Zelenskyy worsening, there is a likelihood that Ukraine will continue these attacks. Ukraine is said to be drawing plans for more attacks against these refineries.
Brent crude oil price technical analysis
The daily chart shows that Brent bottomed at $58.59 in December last year and then started rising. It jumped to a high of $119 in March as the US-Iran crisis escalated.
After bottoming at $70 in July, oil prices then rebounded to $110 on Friday. It has remained above the ascending trendline that connects the lowest swings since July. These swings connect the lowest points in July, August, and September.
Brent has also moved above the dynamic support of the 50-day Exponential Moving Average (EMA). At the same time, the Supertrend indicator has remained in the green.
Brent has also moved above the key resistance level of $109.9, invalidating the double-top pattern. Therefore, the path of the least resistance is highly bullish, with the next target to watch being $115. A move above that level will point to more gains, potentially to $120.