- Ceasefire extension keeps oil supported as Hormuz disruption sustains embedded risk premium.
- Headline-driven market with upside bias as supply risks outweigh easing signals.
- Brent near $100 with escalation risk pointing to further gains and tighter supply conditions.
Yesterday, President Trump unexpectedly chose to extend the ceasefire, buying Tehran more time to present a proposal to end the conflict. With no clear deadline attached, markets are left in limbo. This slight upward drift in oil prices could persist until talks gain traction again.
But if tensions flare up again, then we could see much bigger moves. In the meantime, as long as the Strait of Hormuz remains restricted, a geopolitical risk premium is likely to stay embedded in prices. This should prevent oil from falling meaningfully on any jawboning from Trump. The risks, therefore, remain tilted to the upside.
How High Can Oil Go?
Reports that Iran had received “some sign” the US may be willing to ease the blockade helped to lift sentiment slightly this morning. Still, the bid in prices quickly returned, with pushing back towards the $100 mark. For now, the market remains headline-driven. Developments between the US and Iran will continue to dictate direction until there’s a clear resolution. As it stands, the path of least resistance points higher, with traders watching closely for any signs of escalation that could drive the next move.
With the ceasefire deadline extended indefinitely by the US, there is hope for an eventual resolution. But any signs of a major re-escalation could send prices spiking higher. There is also another scenario: Given the prolonged closure of the Strait of Hormuz, this is going to continue increasing the supply deficit.
Indeed, the global economy remains heavily reliant on energy imports from the Gulf region, which cannot be fully or easily compensated for by increased supplies elsewhere. The market imbalance is only going to increase the longer the strait remains shut. While fuel rationing by some energy-importing nations could ease demand, this is not nearly enough to balance the market. It is also very unlikely we will ever see another demand destruction on the scale of COVID lockdowns.
The only way for prices to go down, therefore, is not just jawboning from Trump or governments forcing people to use less fuel, but actual resumption of oil shipment through the Strait of Hormuz.
Will Brent Break $100 Again?
Tactically, for me, the real line in the sand is around $100 on Brent. It wouldn’t take much for prices already supported by prolonged disruptions in the Middle East to rally further. This is something to watch closely, as it could impact broader financial markets, as we saw in early March when equity markets and the euro sold off. Could we see a repeat of that? It’s becoming more plausible.
The two sides appear to have drifted further apart, and there are now question marks over whether any meetings will take place soon. This would hardly be good news for investors looking for a quick drop in oil prices. It could also stall the equity market rally after the S&P 500 index hit new record highs following a powerful move higher.
If the upside momentum builds, the next resistance levels to watch come in around $103, followed by $105, and then $110—particularly if there’s a meaningful escalation in the conflict.
In terms of support, the first level to watch sits around $98.50. Below that, $96.60 comes into focus, followed by the $94–$95 zone. This area marks a range where prices were trading for several days before the latest breakout higher.
A move back below $94 would start to shift the outlook more negatively and suggest that the recent bullish momentum is beginning to fade.
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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.