Crude oil prices mounted a strong rally on Wednesday and Thursday, returning above key resistance.
USOIL – Daily Chart
The price of USOIL has produced a strong end to last week and vaulted above key resistance. If crude can stay above this level, then further gains are possible.
The news of joint naval drills between Iran and Russia led to an increase in oil prices. Exercises earlier in the week by Iran near the Strait of Hormuz added to the tension. That was accompanied by threats from Donald Trump over the country’s nuclear ambitions.
The premium in oil remains moderate as markets do not anticipate an extended supply disruption. Around 20% of the world’s oil flows through the Strait, but previous conflicts in the region did not lead to persistent supply shocks. Market participants assume that all parties will want to avoid the economic damage that could result from a larger disruption.
Oil has maintained recent strength despite talk of an oil glut still in the market.
Prices are higher than they were six months ago, leaving traders “focused on why a large global surplus … has not translated into a sustained Brent price decline in 2026 year-to-date,” Goldman Sachs analysts wrote.
“My thinking here is that those two things … they could live together,” said Jorge Leon at Rystad Energy.
Oil futures will be tested by the latest headlines, which said Iran and the US will meet in Switzerland for further talks on Monday.
Iran’s top diplomat, Abbas Araghchi, said Iran was working on a draft proposal, adding there is a “good chance” for a diplomatic resolution to the nuclear problem, which has been the key topic of the discussions.
Amidst a US military buildup, US Envoy Steve Witkoff said on Sunday that Trump was confused as to why Iran had not “capitulated”.
“I don’t want to use the word ‘frustrated’… because he understands he’s got plenty of alternatives, but he’s curious as to why they haven’t… I don’t want to use the word ‘capitulated’, but why they haven’t capitulated?”.
