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Published: 18 May 2026,05:57
Daily Market Analysis New
*Escalating Middle East tensions and continued disruptions around the Strait of Hormuz keeping geopolitical risk premiums elevated.
*Brent crude has surged above$110 per barrel as supply disruptions, infrastructure damage, and constrained export flows fuel one of the largest oil shocks in recent years.
*The near-term outlook remains highly headline-driven: progress in ceasefire talks could ease prices toward $100, while further escalation risks pushing oil prices higher and increasing global inflation pressures.
The Middle East conflict has intensified since late February 2026, following initial US and Israeli strikes on Iranian nuclear, missile, and military targets. Iran responded with retaliatory attacks not only on Israel and US assets but also on several Gulf states, including the UAE, Saudi Arabia, Kuwait, Oman, Bahrain, and others. This horizontal escalation has drawn in additional regional players, with reports of Gulf countries conducting strikes on Iranian targets and broader involvement from actors such as Hezbollah in Lebanon. While a fragile ceasefire was attempted in April, differences over terms have stalled progress, keeping tensions elevated and shipping routes vulnerable.
The conflict has significantly disrupted global energy flows, particularly through the Strait of Hormuz, a critical chokepoint handling roughly 20% of global oil trade. Iranian actions and US responses have led to de facto restrictions on shipping, infrastructure damage, and reduced export capacity from major producers. This has triggered the largest oil supply shock in history, with initial disruptions estimated at up to 10 million barrels per day.
Oil prices have surged sharply in response. Brent crude has traded above$110 per barrel in recent sessions, with peaks exceeding $113 recently, while WTI has moved above $107. Prices remain substantially higher year-on-year, reflecting supply concerns, inventory draws, and a persistent risk premium. Factors amplifying the rally include attacks on energy infrastructure, reduced Gulf production, and limited alternative routing capacity.
Broader market effects extend beyond energy, with elevated prices contributing to inflationary pressures globally, particularly for fuel importers in Asia and Europe. Stockpiling and rerouting have provided some buffer, but prolonged disruptions risk further volatility. OPEC+ responses and potential releases from strategic reserves offer partial mitigation, yet uncertainty dominates.
Near-term prospects hinge on diplomatic outcomes. Any meaningful de-escalation or restored Hormuz flows could ease prices toward $100, but renewed strikes or extended blockades may push Brent higher. Investors should monitor ceasefire talks, shipping data, and inventory reports closely, as geopolitical developments will continue driving volatility in energy and related assets.
Technical Analysis
Brent Crude Oil has been trading within a well-defined higher-high and higher-low price structure, reinforcing the prevailing bullish trend. The latest price action saw oil climb to a fresh 10-day high near the $113.70 level, highlighting sustained buying momentum and continued strength in the broader upward trajectory.
Current market momentum remains constructive and may provide enough support for oil prices to break above the immediate resistance at $113.90. A successful breakout above this level would strengthen the bullish outlook and potentially pave the way for further upside extension.
However, a more significant challenge could emerge near the $120.40 resistance zone. This area previously served as a major turning point where a double-top pattern was formed, subsequently triggering a substantial sell-off. As a result, this level is likely to attract increased selling pressure and profit-taking activity.
While the broader trend remains positive, price action around the $120.40 region will be crucial in determining whether Brent crude can sustain its bullish trajectory or encounter another round of corrective pressure.
Resistance Levels: 120.40, 125.35
Support Levels: 105.40, 98.30
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