Brent has already risen by 2.8 percent today, exceeding $85 per barrel for the first time in a month, following an almost 10 percent jump the day before. WTI was trading around $80. European natural gas surged by 3.3 percent, reaching its highest level in over three months. Thus, oil has recovered to a monthly high, reducing the earlier quarterly drop of about 30 percent.
The reason for the increase was President Trump's decision to reinstate the blockade on Iranian vessels passing through the Strait of Hormuz and to demand payment for all other cargoes. This involves a compensation of 20 percent of the cargo cost, or approximately $30 million for a fully loaded supertanker of oil. This came after U.S. military forces completed yet another round of strikes against Iran, which, according to available information, may last for several more days. The United Maritime Information Center reported that U.S. Central Command would start blocking all Iranian ports and coastal areas on Tuesday at 4 PM New York time.
And while Iran managed to export at least 57 million barrels of oil during the short period between two U.S. naval blockades, all this shows how high the stakes are for the global oil market now that restrictions are being reimposed. According to vessel tracking data, over the past week, six U.S. sanctioned supertankers passed through the Oman Strait into the Gulf of Oman with their transponders turned off, effectively operating in shadow mode.
Trump has outlined a new financial logic for the entire operation to protect the strait. He stated that the U.S. would receive compensation from the countries it helps protect shipping, mentioning Saudi Arabia, the UAE, Qatar, Bahrain, and Kuwait. This is a fundamentally new element of the conflict, transforming the U.S. military presence in the region into a direct source of payments from allies.
The conflict continues to unfold on multiple levels simultaneously. The Iranian military has struck American targets in Kuwait with drones. The UAE has announced that two of its tankers were attacked in Omani waters while passing through the southern route of the strait. All this indicates that the conflict is showing clear signs of expanding well beyond the strait itself.
Regarding the current technical picture for oil, buyers need to reclaim the nearest resistance at $81.38. This will allow targeting $86.70, above which it will be quite challenging to break through. The furthest target will be around $92.54. In the event of a decline in oil, bears will attempt to take control over $78.70. If they succeed, a breakout from this range will deal a serious blow to the bulls' positions and push oil down to a low of $76.30, with the potential to reach $73.80.
