Oil Price Forecast: Yemen Tensions Fuel Supply Fears Despite Talks

Oil prices consolidate on Thursday after gains on Wednesday as hopes for the talks about peace offset concerns about supply in the Middle East. The WTI oil price consolidates around the $101.70 area while Brent oil consolidates around $114.90. The tensions in Yemen are escalating which may increase concerns about supply in the Middle East.

The government of Yemen reported that Houthis attacked Aden airport on Wednesday. I think that correction in oil prices from the key resistance area does not suggest that supply fears have faded. Any renewed tensions in the Middle East and any threats to energy facilities or shipping may renew buying interest in the oil market.

The latest US inventory report also provided some support to oil prices. The chart below shows that stocks of crude dropped by 1.89 million barrels last week according to data from the Energy Information Administration. But analysts were expecting a small increase.

This unexpected draw supported oil prices and could leave inventories exposed to further disruptions of supply. But any fresh diplomatic efforts may limit further gains. Qatari mediators presented Iran with new proposal to end the war. But senior Iranian officials described this idea as unacceptable. In my view, any progress towards peace deal may introduce correction in the oil market. But the escalation of tensions may renew buying interest in the oil market.

WTI Oil Price Forecast: Break Above $106 Could Target $120

The 4-hour chart for WTI crude oil shows that price has surged in October from the strong support of $87. The price reached initial resistance near the $104 region. The overall price structure since June 2026 remains constructive as the price has formed rounding bottom pattern. But the price must break above $106 in order to open the way for further upside in the WTI oil market.

The weekly chart for WTI oil shows that the recovery from the lows of June 2026 at around $66 has formed V-shaped recovery. The price has already pushed above $102.50 in October 2026. This suggests strong bullish momentum in the WTI crude oil market.

The 10-week SMA has crossed above the 20-week SMA and the trend remains bullish in the short term. A confirmed break above $106 may push the price to $120. The RSI remains above the midline, which suggests positive trend in WTI oil.

Brent Oil Price Forecast: Break Above $120 Could Target $135

Brent oil also shows a strong bullish structure as seen in the daily chart below. The price has formed multiple rounding bottoms during the strong rally from lows of July 2026. Brent oil broke the $110 level in October to push near the resistance of $120.

Now the price is consolidating near the resistance area. A confirmed break above $120 will likely open the way for further upside to the $130 area. The immediate support in Brent oil remains near $107. As long as the price holds this support, the possibility of upside breakout above $120 is high.

The weekly chart for Brent oil also shows strong bullish structure. The price has recovered from the lows of July 2026 of around $70.86 and then pushed above the $100 area. The strong bullish weekly candles above $100 suggest that trend remains bullish in the short term. A confirmed break above $120 will push the price to the gray area between $125 and $135.

Bottom Line

The correction in oil prices does not change the bullish view. The price remains supported by the risk of supply in the Middle East and the drop in US crude stocks. But the prices must break the key resistance levels to extend the rally. A break above $106 in WTI oil may push the price to the $120 level. On the other hand, a break above $120 in Brent oil may push the price towards the resistance zone of $125-$135.

I think that any further escalation in the Middle East may increase the buying pressure and support these breakouts in oil. But any progress towards peace may limit the rallies in oil.

Read more: Brent and WTI Ease as Iran Peace Hopes Grow