11.03.202609:03 Forex Analysis & Reviews: Oil Is Not Going to Fall Further

The oil market remains highly sensitive to news, with geopolitical risks and government actions significantly influencing pricing. Last Tuesday, oil prices fell, with a barrel falling below the psychologically important $90 mark. This decline was largely prompted by reports of a potential release of strategic oil reserves. The initiative aimed at smoothing sharp price spikes in energy resources provided a calming effect on market participants worn out by recent volatility.

The International Energy Agency (IEA) proposed releasing more than 182 million barrels that had been accumulated back in 2022.

However, the price drop proved short-lived. The situation changed abruptly last night when information emerged about potential actions from Iran. The statement about the possible mining of the Strait of Hormuz, a crucial maritime route for oil transportation, instantly reintroduced uncertainty into the market and heightened geopolitical tensions. It is worth reminding that the Strait of Hormuz is not just a waterway; it is an artery of the global energy market, and any reports of its blockage or security threats automatically lead to rising oil prices due to concerns over supply disruptions.

This episode vividly illustrates the fragile balance in which the modern energy market exists. On one hand, there are attempts to stabilize prices through market or administrative measures, such as releasing oil from reserves. Such actions aim to meet growing demand and prevent inflation. On the other hand, there are always unpredictable geopolitical factors that can suddenly undermine all efforts at stabilization.

However, it should be understood that the main catalyst for the sharp rise in energy prices has been the attack by the U.S. and Israel on Iran. If the volume of transportation through the Strait of Hormuz does not quickly return to pre-war levels in the near future, energy prices will remain high and may even rise again. Attempts to stabilize prices by releasing strategic reserves may yield only a temporary effect if the underlying causes of price fluctuations—geopolitical instability and supply disruptions—are not addressed.

As for the current technical picture of oil, buyers need to break through the nearest resistance at $86.67. This will allow them to target $92.54, above which it will be quite difficult to break through. The furthest target will be the area of $100.40. In the event of a decline in oil prices, bears will attempt to take control over $81.38. If they succeed, breaking this range will deal a serious blow to the bulls' positions, pushing oil to a minimum of $74.85 with the potential to reach $67.77.