Oil Price Forecast: Brent and WTI Rise on US-Iran Risk

Oil prices rebounded on Tuesday after the sharp drop on Monday as investors worry about a quick US-Iran peace deal. The talks in Doha continued but neither side had much hope for an immediate breakthrough. This maintained the high level of market uncertainty. Brent crude oil rebounds from the $97.16, while WTI oil rebounds from $92.25 as traders react to the risk of further conflict.

The main focus is still on the Strait of Hormuz for oil traders. Both sides were talking about the opening of the Strait 30 days after a deal. But this does not confirm the timing. This is important because the Strait serves as a major shipping corridor in the world for oil and LNG. A failure to reopen it will fuel fears of supplies and help maintain higher oil prices.

Fresh U.S. strikes on southern Iran added more risk to the market. In addition, the attacks targeted the ships carrying mines and missile launch pads. This indicates that the war is not yet over. This reduced the impact of the optimism about the peace talks and maintained a risk premium in oil prices. With the prospect of better talks and the reopening of the Strait, oil prices may consolidate at lower levels. But if strikes persist in Iran, Brent and WTI could trade at higher prices.

WTI Oil Technical Analysis: $105 Breakout in Focus

The rebound in WTI oil on Tuesday is due to technical reasons as the price has hit the short-term support at $89.60. The chart shows that WTI oil failed to break above the black dotted trend line at $105 and continues to push lower within the $80-$120 range.

A break below $89.60 in WTI oil will likely push prices towards $80. But a recovery above $105 will likely break the black dotted trend line and open the door to a short term rally to $120.

Oil prices have been trading within the $80 to $120 range since the U.S.-Iran war. A break above $120 will push oil prices further higher into the next trajectory.

The long term monthly chart for WTI oil also confirms the strong support on Tuesday. The chart shows the red zone, which is the highs of September 2023 and October 2022.

The $89.60 zone was resistance in 2023 and 2022, which indicates the short term support in the WTI market.

On the other hand, the resistance of $110 on the monthly chart is also driving this correction. A break above $110 on a monthly basis will open the door for quick surge towards $125 to $130. But a break above $130 on a monthly basis will open the door for a record rally in the oil market.

Therefore, market participants are trying to protect these levels to push prices lower and keep the economy in order. The RSI indicator also shows strong resistance.

Brent Oil Technical Analysis: $120 Breakout in Focus

Brent oil market also shows the same broader consolidation. The consolidation range in Brent is between $90 and $120. The strong volatility within these price ranges indicates a global oil crisis.

Despite this crisis, the formation of a descending broadening wedge pattern from May 2024 to February 2026 indicates that the overall structure remains bullish. The breakout from the descending broadening wedge pattern at $72.72 and then the breakout above $90 confirms the bullish structure. These breakouts have opened the door for further upside in Brent oil.

However, the market must break above $120 to keep the bullish momentum in oil prices. But a break below $90 will take prices towards the $80 area. Traders see $80 as a strong buy zone.

In the short term, the RSI remains below the mid-level and points lower. This suggests that the short term oil prices may see further consolidation.

Bottom Line

The geopolitical risk supports the oil price outlook despite hopes for some progress in the U.S.-Iran talks. Buyers support the oil market as WTI and Brent rebound from key support. The Strait of Hormuz is still the main concern as any further delay in the reopening of the Strait could prolong fuel shortages.

From a technical perspective, WTI must break above $105 and Brent must break above $120 to signal another acceleration in the rally. But a break below $89.60 for WTI or $90 for Brent would lead to a further decline towards the $80 region. For now, oil is in a choppy range, and the next move will likely depend on the peace talks, fresh strikes and the course of the Strait of Hormuz.

Read more: WTI and Brent Set Up for the Next Breakout