Iran Tensions, Hormuz Bottleneck Drive Brent Toward $100

Oil prices climbed Monday, with WTI settling at $84.96 a barrel and Brent at $92.81, as escalating U.S.-Iran tensions and a near-total halt in Strait of Hormuz traffic tightened supply expectations. Both countries have ruled out extending the June agreement, and Iran warned of possible offensive action if diplomacy fails, raising the risk of wider conflict, traders said.

Only three vessels crossed the strait on Sunday, down from 130 before the conflict, according to shipping data. The bottleneck has delayed crude deliveries and pushed up freight and insurance costs. With global production steady, the supply squeeze is helping sustain prices, traders said.

China cut crude imports by 4 million to 5 million barrels a day in recent months. That tempering effect may fade. Chinese refiners could step up purchases at current prices, traders said. A return of Chinese buying alongside the Hormuz chokehold would add further upward pressure.

WTI crude has formed a rounding cup pattern between June and July, with a second cup forming in August, chart watchers said. A break above $87 would confirm the pattern and open the path to $93.80, followed by $105. The weekly chart shows a strong rebound from $66 support, which retested the breakout from a descending trendline dating to September 2023. The relative strength index remains above the midline, indicating continued upward momentum.

Brent crude has rallied above its 50-day and 200-day simple moving averages. A break above $100 would target the $125 area, analysts said. The weekly chart shows a bullish candle with a long lower wick, followed by two constructive weeks. The RSI is accelerating, pointing to further upside.

Traders said the key risk is a de-escalation in U.S.-Iran tensions or a recovery in shipping activity, which would slow the rally. The combination of supply risks and technical breakouts could keep prices supported in the near term. Brent closed at $92.81 on Monday, up 2.5%.