08.05.202609:44 Forex Analysis & Reviews: US and Iran Exchange Strikes. Oil Prices Rise

Yesterday, oil prices rose amid the resumption of clashes between American and Iranian forces, which overshadowed the prospects for concluding a deal to end the 10-week war.

The price of Brent crude oil increased by 2.9% to $103 per barrel before slightly declining, while West Texas Intermediate (WTI) oil approached $96. The rise occurred after American troops struck military targets in Iran. President Donald Trump stated that three US warships, which were attacked by Iran, successfully departed the waterway without sustaining damage. Regarding Iran, he added, "In the future, we will deliver a much stronger and harsher blow if they do not sign a deal."

The oil market's attention remains focused on the Strait of Hormuz, which has effectively been closed since the beginning of the war in late February. This has led to an unprecedented supply shock: oil flows are cut off, and wells across the region are halted. The waterway is under a dual blockade: Tehran is blocking ship movements, while the US prohibits vessels from entering or leaving Iranian ports.

All of this suggests that oil is trading between two risks: diplomacy on one side and escalation of conflict on the other. The markets are still giving the peace proposal a chance, but not enough to lower the risk premium.

Recent clashes have heightened tensions in the region as the US seeks to exit a war that is increasingly burdening consumers due to sharp increases in retail prices for gasoline and diesel. This week, the Trump administration sent another proposal to Tehran regarding the resumption of trade routes, but Iranian leaders have not indicated whether they will accept these terms.

Today, the United Arab Emirates announced that its air defense systems intercepted missiles and drones launched from Iranian territory. It seems that the attacks began after the UAE permitted Americans to use their military bases.

Regarding the current technical picture of oil, buyers need to overcome the nearest resistance at $100.40. This will allow targeting $106.80, above which it will be quite challenging to break through. The farthest target will be around $113.80. In the event of a decline in oil prices, bears will attempt to take control over $92.50. If this is achieved, breaking the range will deal a significant blow to bulls' positions and push oil down to a low of $86.67, with the potential to reach $81.38.