Brent crude's break above 108.45 resistance puts the 61.8% projection at 111.56 in focus. The Trump-Xi summit signaled supply rerouting, not a Hormuz resolution, reshaping petrocurrency flows.
Brent crude surged toward $110 today after traders reassessed the implications of comments made by US President Donald Trump following his two-day meeting with Chinese President Xi Jinping in Beijing. Rather than signaling coordinated pressure on Iran to fully reopen the Strait of Hormuz, Trump emphasized plans for significantly expanded Chinese purchases of American oil exports.
“They’ve agreed they want to buy oil from the United States,” Trump said in an interview with Fox News. “We’re going to start sending Chinese ships to Texas and to Louisiana and to Alaska.”
That message appears to have fundamentally altered market psychology.
Before the summit, many investors had hoped Beijing would use its leverage as the largest buyer of Iranian oil to pressure Tehran into ending shipping disruptions and reducing tensions in the Gulf. A credible Hormuz reopening would likely have triggered a sharp collapse in crude prices by removing much of the war premium embedded in energy markets.
Instead of hearing a pathway toward reopening the Strait, markets increasingly heard something very different: a rerouting of global supply chains around a continuing disruption.
If China increasingly replaces Iranian barrels with American energy supplies, Beijing may have less strategic incentive to defend Iranian export infrastructure or oppose more aggressive US actions against Tehran. Some traders interpret the summit outcome as raising – not lowering – the probability of future military escalation.
Key insight: The summit did not solve the Hormuz disruption; it reorganized the supply chain around it, reducing China’s incentive to push for a reopening.
As a result, oil markets are beginning to shift toward pricing a more structural fragmentation of global energy trade flows. The summit did not solve the war. It may simply have reorganized the winners and losers. That helps explain why oil prices are accelerating higher rather than retreating despite two days of high-level diplomacy.
The simple read ahead of the Trump-Xi meeting was that high-level diplomacy would cool tensions and pave the way for a Hormuz reopening. Crude had already rallied sharply on supply disruption fears, and any credible signal of de-escalation was expected to trigger a swift unwind of the war premium.
That unwind did not happen. Instead, Trump’s post-summit remarks focused on US oil exports to China as a solution to the supply problem. The market interpreted this as an acknowledgment that the Strait of Hormuz disruption will persist, and that the global energy system is adapting to a new normal rather than waiting for a resolution.
The better read is that the summit outcome reduces China’s incentive to push Iran toward reopening the Strait. If Beijing can secure reliable energy supplies from the US, its strategic interest in defending Iranian export routes diminishes. This shift raises the probability that the US may take more aggressive action against Iran without fear of alienating its largest trading partner. That, in turn, increases the risk of further supply disruptions, not less.
The rerouting thesis is not just about China buying more US oil. It signals a broader fragmentation of global energy trade. Tanker routes are being redrawn, insurance costs are rising, and the traditional arbitrage relationships that kept global crude markets efficient are breaking down.
For traders, the practical implication is that oil price volatility is likely to remain elevated, and the usual mean-reversion patterns that follow geopolitical spikes may not apply this time. The market is pricing a structural shift, not a temporary shock.
Brent crude’s rise from the 96.03 low resumed through 108.45 resistance today. That level, which had capped the initial rebound, now becomes a critical support area on any pullback.
With the break confirmed, the immediate focus shifts to the 61.8% Fibonacci projection of the 96.03 to 108.45 move, measured from the 103.88 swing low. That projection sits at 111.56. A firm break above that level would open the door to the 100% projection at 116.30.
Traders should watch how price reacts around 111.56. A clean push through on strong volume would confirm that the breakout has momentum. A rejection, however, could signal that the move is running out of steam and that a deeper retracement toward 108.45 is likely.
Beyond the Fibonacci projections, the 115.30 level carries structural significance. It marks the upper boundary of a converging triangle pattern that has been forming since the 119.50 high made in March. A decisive break above 115.30 would be the first indication that the entire triangle has completed to the upside.
If that happens, the pattern would project a long-term uptrend resumption through the 120 psychological barrier. The triangle’s measured move would target levels well above 120, potentially setting up a run toward the highs seen earlier in the year.
| Level | Significance |
|---|---|
| 108.45 | Former resistance, now support |
| 111.56 | 61.8% Fibonacci projection |
| 115.30 | Triangle pattern resistance |
| 116.30 | 100% Fibonacci projection |
| 119.50 | March high |
| 120.00 | Psychological barrier |
Higher oil prices driven by supply disruption tend to benefit petrocurrencies like the Canadian dollar (CAD) and the Norwegian krone (NOK). Both economies are major oil exporters, and their currencies often strengthen when crude rallies on geopolitical supply fears.
The current move is no exception. As Brent pushes toward $110 and beyond, USD/CAD is likely to face downward pressure, while EUR/NOK could see the krone outperform. The relationship is not always linear. If the oil surge is accompanied by a broader risk-off move in global markets, safe-haven demand for the US dollar could partially offset the commodity-driven strength in CAD and NOK.
Traders should monitor the forex correlation matrix to track how these pairs are moving relative to oil. A sustained break above 111.56 in Brent would likely accelerate CAD and NOK gains, while a failure at that level could see those currencies give back recent advances.
The rerouting thesis also carries a risk for petrocurrencies. If the market begins to price a higher probability of direct military conflict between the US and Iran, the resulting risk-off shock could trigger a flight to the US dollar and Japanese yen, even as oil prices spike. In that scenario, CAD and NOK might not benefit as much as a simple oil-currency correlation would suggest.
The last time this dynamic played out was during the early weeks of the Iran conflict, when oil surged but CAD struggled to rally because of the broader risk aversion. The Iran War Enters 12th Week, Oil Supply Fears Reshape FX Flows article detailed how supply fears reshaped FX flows, with safe havens outperforming despite the oil spike. A similar pattern emerged when the UAE Pipeline Shrinks Oil Risk Premium, Weighing on CAD and NOK, showing that not every oil spike translates into straightforward petrocurrency strength.
For the bullish oil thesis to hold, Brent must sustain its break above 108.45 and ideally push through 111.56 without a sharp rejection. A daily close above 111.56 would confirm that the rerouting narrative has technical backing and that the next leg toward 116.30 is in play.
The setup weakens if Brent fails to hold 108.45 on a pullback. A move back below that level would suggest the breakout was a false signal and that the triangle pattern remains intact, with a potential retest of the 103.88 swing low.
For forex traders, the confirmation signal is a simultaneous break in Brent above 111.56 and a move in USD/CAD below its recent support levels. If oil rallies but CAD fails to strengthen, it would indicate that risk-off flows are dominating, and the trade is not clean.
Bottom line for traders: The Trump-Xi summit did not deliver the Hormuz resolution that markets had hoped for. Instead, it reinforced a supply rerouting narrative that is structurally bullish for oil and, under the right conditions, supportive for petrocurrencies. The technical levels are clear; the next move depends on whether Brent can clear 111.56 and hold above 108.45.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.