Crude Oil Holds Within 3-Year Downtrend Despite Supply Risks

Key Events to Watch

Strait of Hormuz Risks vs. Nuclear Deal Hopes
FOMC Meeting Amid a Weak Dollar and Geopolitical Tensions
Headlines Hinting at $90 and $100 per Barrel—Far-Fetched?

$100 per Barrel: Far-Fetched?

Crude oil failed to maintain bullish momentum on Monday, despite heightened geopolitical tensions between Israel and Iran over the weekend. Markets seem to be pricing in a swift resolution—or, at the very least, the lack of any confirmed supply disruption from either country. However, elevated call option volumes indicate that hedging for upside risk remains active, suggesting that investors are still positioning for potential price spikes this month as tensions persist.

Forecasts projecting $100 per barrel can be assessed from two distinct angles. On one hand, a decisive breakout above key resistance levels at $80, $83.50, and $95 would require a combination of strong global demand or a critical supply shock, such as the closure of the Strait of Hormuz. On the other hand, absent these factors, oil prices are likely to remain moderate, aligning more closely with current inflation targets, monetary policy paths, and economic growth agendas.

Consequences of Higher Oil Prices

While recent price increases support OPEC’s gradual unwinding strategies, offering the bloc favorable revenues after prolonged price suppression, a sharp and sustained spike in oil prices may have adverse effects on global economies. If inflationary pressures intensify, the probability of crude holding below the $80–$90 range increases, as central banks would be forced to respond more aggressively.

Powell and the U.S. Economic Landscape

The U.S. Dollar Index continues to hover near three-year lows, facing a trendline that connects higher highs from the 2008 bottom. This trendline faces pressure from economic fragility from tariffs and political uncertainty from the Trump agenda. With the upcoming FOMC meeting, all eyes will be on any updates to the rate path and economic projections. Fresh data may be crucial to reverse the current bearish sentiment heading into the summer months.

Crude Oil Outlook: Weekly Time Frame – Log Scale

Source: Tradingview

Crude oil remains technically constrained within the three-year descending channel formed since the 2022 highs, currently capped just below the $78 resistance. A clean breakout and hold above $78 could trigger a bullish shift, with upward targets at $80 and $83.50, followed by psychological levels at $90 and $100, should major supply disruptions materialize. Conversely, a failure to break higher leaves the outlook neutral to bearish, with the pullback continuing within the downtrend. Key support zones to monitor include $69, $66, and $64, where potential rebound opportunities could emerge.

Written by Razan Hilal, CMT

Follow on X: @Rh_waves

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67.6% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.