Brent crude oil price forms island reversal pattern: will it surge to $100?

Brent crude oil price retreated for the fourth consecutive day as tensions in the Middle East cooled following President Donald Trump’s intervention. It dropped to $93.50, down sharply from the year-to-date high of $120. Still, all signs show that the price will rebound in the coming days and weeks.

Brent crude oil price falls as Trump urges end to Iran and Israel shooting 

WTI and Brent crude oil price rose to nearly $100 on Monday as Israel and Iran went to war. Iran launched several missiles and drones towards North Israel on Sunday, pushing Israel to retaliate with its own attacks.

These attacks were severe and risked spiraling the region to another conflict as Israel has long wanted. In multiple statements, Israel’s Benjamin Netanyahu has said that he opposed the ceasefire between the US and Iran. That’s why he has intensified his attacks against Lebanon. Iran has said that any deal with the United States will be contigent to Israel ending its fighting against Hezbollah.

The ongoing Brent crude oil retreat is a sign that investors expect that the crisis between Iran and Israel has now ended. In reality, however, talks between the US and Iran have largely stalled, meaning that the Strait of Hormuz will remain closed for longer than expected.

While Trump does not want to restart his war, there is a likelihood that Israel will push him into one over time. Such a move will be risky for the energy market as analysts expect that the Red Sea will come to play. Yemen’s Houthis have already warned that that they will block all Israeli-linked ships from crossing the Bab el-Mandeb Strait.

A complete closure of this strait will remove at least 7 million barrels of oil a day from entering the market. That will be on top of between 13 million and 20 million barrels of oil that used to pass through the Strait of Hormuz. 

All this is happening at a time when oil inventories in key countries like the United States, South Korea, and Japan are getting dangerously low. For example, in the US, Strategic Petroleum Reserves fell to 791 million barrels, the lowest level since February 2024. US crude oil stocks have fallen by 64 million barrels since the war started. In a statement, a senior Chevron executive said:

"We're approaching unheard of inventory levels. I mean, really, really low levels. You can debate whether that's going to hit those really low levels in two weeks or three weeks. But once you get to that point, you'll see prices shoot up.”

Oil price technical analysis

Brent crude oil price chart | Source: TradingView

The daily chart shows reveals that Brent crude oil price remained under pressure this week. It was trading at $93.55, inside the narrow range it has remained since May 2025. 

The price has remained below the 50-day and 100-day Exponential Moving Averages (EMA). It also dropped below the 38.2% Fibonacci Retracement level this week.

Crude oil has formed an island reversal pattern, which is a common bullish reversal sign in technical analysis. Therefore, there is a risk that the price will likely bounce back and move to $100 over time. This view will become invalid if it falls below the lower side of the island reversal at $90.