Brent crude oil price analysis as contentious US-Iran ceasefire continues

Crude oil price continued rising on Monday as investors reacted to the new developments on the US-Iran war. Brent, the global benchmark, soared to a high of $107, much higher than the year-to-date low of $55. The West Texas Intermediate (WTI) continued soaring as well and crossed $100.

US-Iran ceasefire continues as war risks rise

Brent crude oil price continued rising as investors reacted to the new developments on the US-Iran war. On Friday, the price dropped as Iran confirmed that Foreign Minister confirmed that he was traveling to Pakistan.

Iran, unlike the United States, has been less eager of having talks as we saw last week. At the time, Trump was insisting that his team would travel to Pakistan for talks. At some point, he claimed that Vice President JD Vance was already on the way. 

He also shared details on the deal he was negotiating, claiming that it would be a better one than the JCPOA that Barack Obama negotiated. Iran, on the other hand, believes that it has the upper hand and is unwilling to make major concessions.

Therefore, with talks stalled, chances are that the crude oil price will continue rising as the ceasefire between the two countries remains. Iran has claimed that it saw no need for talks as Trump’s blockade continues.

A possible catalyst for the Brent crude oil price is the potential resumption of the war between the US and Iran. Such a war would see the US launch a major attack on its critical infrastructure like bridges and power plants.

On the other hand, Iran would respond by bombing oil infrastructure in the Middle East, including the Saudi Arabian pipeline that is transporting millions of barrels per day. It may also destroy other oil infrastructure projects in other countries like Bahrain and Kuwait.

The US would also destroy crucial infrastructure in Iran, like Kharg Island and its oil fields. While other countries, including the US, would increase their production, replacing the Middle East crude oil will not be easy.

Crude oil will likely react to some major events this week. For example, the US will publish the latest inventory numbers on Wednesday. These numbers have shown that inventories dropped slightly last week as US oil exports surged. 

The price will also react to key central bank decisions, especially the Federal Reserve, which will release its decision on Wednesday. Other top central banks to watch will be the ECB, BoE, and the BoJ.

Brent crude oil price technical analysis

Crude oil chart | Source: TradingView

The weekly chart shows that the Brent crude oil price has rebounded in the past few months. It has jumped from a low of $58 earlier this month to the current $107. It formed a giant morning star candlestick pattern, a common bullish reversal sign.

Oil has remained above all moving averages, a sign that bulls remain in control. It has also jumped above the major S/R of the Murrey Math Lines tool.

Therefore, unless a major thing happens, chances are that the price will continue rising, potentially to $110. A move above that level will point to more gains, potentially to $115. A reversal may happen if Iran agrees to talks with the US.