Crude oil prices continued their bull run, reaching its highest level since May as concerns about the escalation between the US and Iran grew. It jumped to $117, continuing a bull run that started in July when it bottomed at $70. This rally will likely continue rising in the coming weeks.
Brent and WTI jumps on rising US-Iran escalation fears
There are signs that the US, Iran, and Israel are planning a major escalation in the coming weeks.
President Donald Trump has insisted that the US will not launch any attacks against Iran before the midterm election.
Media reports suggest that the US and Israel are preparing a massive attack aimed at Iran’s civilian infrastructure. Trump and his officials believe that such a move will push Iran to capitulate and reach a deal.
Israeli leaders have also planned to attack Iran’s oil infrastructure, a move meant to choke the country’s finances. A key target in these attacks will be Kharg Island, which handles more than 90% of Iran’s oil exports.
Iran, on the other hand, has warned that its response to any attacks will be more severe than before. It has warned that it will target energy infrastructure of its neighboring countries, including Bahrain, Kuwait, Saudi Arabia, and the United Arab Emirates.
Most analysts believe that the next phase of the war will be more destructive than previously. For one, Houthis, a less-equipped group than Iran has demonstrated its capability in choking Saudi Arabia’s oil facilities.
Crude oil prices also continued rising as investors reacted to the ongoing Iranian attacks on ships crossing the Strait of Hormuz. The UKMTO issued a report of a ship that was attacked by an unknown projectile today, but open-source information is that more ships were attacked.
Brent crude oil price technical analysis
The daily chart shows that Brent has been in a strong rally in the past few months. This rally started after it bottomed at $70 in July. It has now crossed the important resistance level of $109.96, which coincided with the highest swing on September 11. Moving above that level was important as it invalidated the double-top pattern.
Crude oil has remained above the ascending trendline that links the lowest swings since July. It also rose above the 50-day Exponential Moving Average (EMA), while top oscillators like the MACD and the Relative Strength Index (RSI) have continued rising.
Therefore, the price will likely continue rising as bulls target the key resistance level of $120. It may even rally past that as the crisis in the Middle East escalates.