Brent crude oil prices soared almost 11% on Monday, reaching $83.31 after rebounding from a support zone between $71 and $73. This sharp increase marks one of the largest daily gains since the start of the US-Iran conflict in late February.
The price rally was fueled by renewed US military strikes on Iranian targets, with the US Central Command stating that the strikes are intended to weaken Iran's capacity to threaten shipping in the Strait of Hormuz. In response, Iran launched missile and drone strikes on US facilities across the Gulf and reasserted a closure of the strait, warning vessels against unauthorized crossings.
Washington is taking further measures by planning to assume direct control over the Strait of Hormuz, which is critical as it facilitates roughly 20% of global oil trade during peacetime. Consequently, shipping traffic has dropped significantly; only nine vessels transited the strait in a recent 12-hour period, compared to about 130 before the conflict escalated.
Market Reactions and Technical Indicators
While oil prices surged, equity markets reacted variably. The Nikkei 225 index fell nearly 2%, with Japanese stocks suffering a total loss of 82 trillion yen in the past three weeks. Conversely, the Brent crude oil market benefited from a shift in risk assessment, contrasting sharply with declines in South Korean equities.
The daily Relative Strength Index (RSI) for Brent crude has broken out, now hovering near 55, indicating that buyer momentum is gaining traction. Previously, multiple sell-offs had capped price recoveries around key resistance levels. However, momentum appeared to regain strength after bottoming near 27 in late June, confirming a bullish trend.
Furthermore, analysts are projecting a potential price target of $90 to $92 for Brent, as the market continues to respond positively to recent developments.
This article is for informational purposes only and does not constitute financial advice.
