Brent crude oil price rose for two consecutive weeks, reaching its highest point since March 16 this year. It ended the week at $109 as investors reflected on the ongoing developments in the Middle East, where the fragile ceasefire between the United States and Iran continued.
Donald Trump reviewing the Iran proposal
Brent crude oil price surged last week after Admiral Brad Cooper met with the White House and updated it on the potential plans for the war. His three options were of a limited strike against Iran to push it towards a deal, a plan to take the highly enriched uranium, and taking control of the Strait of Hormuz.
All these options would lead to a more severe response from the Iranians, who believes that they have more cards to play, including blocking the Red Sea and attacking oil infrastructure in the region.
Oil prices ended the week lower as the media reports suggested that the two sides were still negotiating, with the help of the Pakistanis. In a statement on Saturday, Donald Trump confirmed that the US had received a 14-point plan from the Iranians.
According to Axios, Iran set a one-month deadline for negotiations on a deal to reopen the Strait of Hormuz, end the US naval blockade, and permanently end the war in Iran and in Lebanon.
The new proposal also calls for another one month to negotiate a new nuclear agreement. Trump has said that he is dissatisfied with the proposal and warned that he may order new strikes if Iran misbehaves. Some in the Trump administration believe that Iran is just buying for time.
Therefore, there is still a risk that the two sides will go back to war, which would push oil prices much higher in the near term. The next phase of the war would be more lethal as it would include key infrastructure projects in the region.
Meanwhile, Brent price will react mildly to the latest OPEC+ proposal to boost supply this year. Countries will increase supply in the coming weeks. While this is important, the impact will be limited because of the ongoing war.
Brent crude oil price technical analysis
Crude oil price chart | Source: TradingView
The weekly timeframe chart shows that the Brent crude oil price has jumped from a low of $55 to the current $109. It has already formed a golden cross pattern as the 50-week and 200-week Exponential Moving Averages (EMA) have crossed each other.
The price has moved above the upper side of the descending channel, which is part of the bullish flag pattern, a common continuation sign in technical analysis.
Therefore, the price will likely continue rising as bulls target the next key resistance at $120. A move above that level will point to more gains as the war continues.
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