Brent crude oil price continued rising last week, even after the US coordinated another release of strategic petroleum reserves by G7 countries. It ended the week at $102.60, its highest level since September 23rd. This rebound may continue as odds that the US and Iran will escalate in October rise.
Odds of US and Iran escalating are rising
Brent and the West Texas Intermediate rose modestly after the US and other G7 countries announced a plan to release 100 million barrels of oil. The move came as these countries came under pressure from the Trump administration.
Trump is highly concerned that the rising oil prices will have a negative in the upcoming midterm elections. He hopes that the releases will lead to lower oil prices, which will help Republicans.
The challenge, however, is that the crisis between the US and Iran is set to escalate. For one, the US is sending a new aircraft carrier to the Middle East, with Trump warning that he may need to escalate after the US election.
At the same time, there are concerns that Iran will seek to escalate in the coming weeks so that it can push crude oil prices higher. It may do that by launching strikes against US targets in the region, a move that will push the US to respond.
There are also concerns about the destruction of oil and gas infrastructure in Russia and Saudi Arabia. Ukraine has vowed to continue hitting Russian positions as the battle between the two countries escalates.
At the same time, Houthis continued battling Saudi Arabia, including targeting a major refinery by Saudi Aramco. Saudi Arabia is also considering intensifying its battle against Houthis, including by deploying thousands of troops. Indeed, blasts were heard in Sanaa, Yemen’s capital as Saudi targeted key Houthi positions.
These events are bullish for crude oil prices because attacks on refineries and other infrastructure could delay their return to operation, even after the war ends.
Brent crude oil price technical analysis
The daily chart shows that Brent crude oil price has done well in the past few months, moving from a low of $70 in July to the current $102.60. It has remained above the ascending trendline that connects the lowest levels since July this year. This trendline has provided it with substantial support in this period.
Brent has also remained above the 50-day and 100-day Exponential Moving Averages (EMA), a sign that bulls remain in control. It also sits above the Supertrend indicator.
Therefore, the price will likely continue rising in the coming days as bulls target the key resistance level of $109.96, its highest level in September. A move above that level will point to more gains, potentially to $115.