Brent and West Texas Intermediate (WTI) crude oil benchmarks held steady on Hyperliquid on Sunday as investors watched the new developments on the ongoing US-Iran quagmire. WTI was trading at $91.7, while Brent was trading at $94.55.
Crude oil price in a tight range as US-Iran talks stall
The energy market is in a tight range this week as investors focus on the new developments in the Iran and US talks. These talks to extend the ceasefire have stalled, and a deal remains uncertain.
Worse, the two sides have started launching attacks against key assets. Iran launched several attacks against Bahrain and Kuwait during the weekend, with CENTCOM intercepting most of them. The US also launched strikes against key Iranian targets.
Iran has rejected signing any agreement with the United States, citing the ongoing fighting between Israel and Hezbollah. Hezbollah rejected a ceasefire deal made between Israel and Lebanon.
Therefore, there is a likelihood that the status quo will continue this week, with no deal being in sight. The longer this happens, the worse it will be for the world’s energy markets as the Strait of Hormuz will be closed.
With talks stalling, the US is mapping more strategies to pressure Iran to reopen the Strait of Hormuz. One of the key strategies being developed is using Iranian assets to fund the reconstruction of Gulf allies. If this happens, Iran will respond by charging higher tolls at the Strait of Hormuz.
The most recent data shows that the US inventories are slumping. It declined by over 8 million barrels a week ago, with the Strategic Oil Reserves falling to the lowest level in 22 years. Analysts believe that they will get to dangerous levels the longer the Strait is closed.
Crude oil price technical analysis
Oil price chart | Source: TradingView
The daily chart shows that the Brent crude oil price has remained in a tight range in the past two weeks. This consolidation happened after it formed a big down-gap on May 22. There are signs that this is an island reversal pattern, which would point to more gains over time.
Brent is trading between the 50% and 38.2% Fibonacci Retracement level. It has also moved below the 50-day Exponential Moving Average (EMA), a bearish sign. At the same time, it has formed what looks like a double-top pattern, which leads to more downside.
Therefore, more downside will be confirmed when the price retreats below the key support at $89.80, its lowest point on May 29. If this happens, the next key level to watch will be at $82.15, the 61.8% Fibonacci Retracement level.
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