Crude Oil Market Analysis: Geopolitical Risks Sustain Price Rally

Oil Market Overview and Geopolitical Drivers

Oil prices continue to face upward pressure as geopolitical tensions remain high. Brent crude has surpassed $112 per barrel following an 8% gain last week, while West Texas Intermediate (WTI) is trading near the $108 level. These gains are largely driven by ongoing concerns regarding supply disruptions through the Strait of Hormuz.

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Supply constraints have intensified following the expiration of exemptions for Russian oil sales and continued security incidents in the Persian Gulf. A recent drone strike on an energy facility in the United Arab Emirates has further underscored the fragility of the current regional ceasefire, maintaining a significant risk premium in energy markets.

Supply Outlook and Infrastructure Challenges

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Since the onset of hostilities in late February, oil prices have increased by over 50%. Economists warn that even if the conflict were to conclude and the Strait of Hormuz were reopened immediately, the restoration of critical infrastructure and the normalization of global supply chains could take at least six months.

Despite periodic headlines regarding potential diplomatic resolutions, no formal mechanism has been established to secure supply routes through the Strait of Hormuz. Consequently, market analysts expect the elevated risk premium to persist, providing a floor for oil prices in the near term.

Technical Analysis and Price Forecast

From a technical standpoint, the immediate objective for buyers is to reclaim the $113.80 resistance level. A successful breach of this threshold would shift the focus toward the $118.80 resistance, with a secondary target situated at $124.40.

Conversely, bearish pressure may materialize if prices fail to maintain current levels, with a critical support zone identified at $106.00. A definitive break below this level could trigger a decline toward $100.00, with further downside potential extending to the $92.50 mark.

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