Societe Generale\u2019s commodities team said Brent has fallen below its 50-day moving average for the first time since January, after forming a lower high near $113 last week. The contract is now testing interim support around $96, the low reached earlier in May. If that level fails, the bank outlined downside markers at an ascending trend line drawn since March around $91\/$90, followed by $86.<\/p>\n
The team also modelled several Strait of Hormuz reopening paths and linked them to year-end price outcomes. Under an early June reopening scenario, Brent would drift down towards about $85 per barrel by year-end, while later resolutions could drive spikes towards $150\u2013$160. In a low-probability case where Hormuz remains shut until year-end, Brent could move above $200 per barrel.<\/p>\n
We are watching Brent crude closely as it has lost its footing, falling below the 50-day moving average for the first time since January. The price is now testing a critical support level around $96 per barrel. This technical weakness comes amid extreme geopolitical tension in the Persian Gulf.<\/p>\n
The immediate cause is the ongoing disruption in the Strait of Hormuz, where recent naval tensions have reduced tanker traffic by over 70% this month, according to maritime tracking data. This has tightened the market significantly, with the latest EIA report confirming a sharp drawdown in global crude inventories. The CBOE Crude Oil Volatility Index (OVX) reflects this tension, having spiked to 55 from an average of 30 in April.<\/p>\n
For traders, this signals a period of high volatility rather than a clear directional trend. If Brent fails to hold the $96 support, we see a potential slide towards the ascending trendline near $90. A swift diplomatic resolution, which we see as a possibility by early June, would likely push prices steadily down toward $85 by year-end.<\/p>\n
This downside scenario suggests positioning with put options or bear put spreads to capitalize on a relief rally in the event of a reopening. However, the risk of escalation remains incredibly high and must be managed. The market is pricing in a significant probability of a prolonged outage.<\/p>\n
If the Strait remains restricted or closes entirely, we expect a rapid price spike toward the $150\u2013$160 range, similar to the moves seen during previous major supply shocks. This outlook supports buying long-dated call options or bull call spreads to capture the explosive upside potential. The high implied volatility makes these options expensive, but they offer a defined-risk way to trade a major supply crisis.<\/p>\n
A low-probability scenario where the disruption continues through the end of the year could see Brent crude surpass $200 per barrel. Given the two extreme possibilities, strategies like long straddles or strangles could be effective, profiting from a large price move in either direction. The key is to monitor diplomatic channels and maritime reports, as they will be the primary catalysts for the market’s next significant move.<\/p>\n","protected":false},"excerpt":{"rendered":"
Brent breaks 50-day average, tests $96 support; Hormuz tensions fuel volatility, with outcomes ranging $85\u2013$200.<\/p>\n","protected":false},"author":103,"featured_media":41760,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[5,108,66,20,97],"class_list":["post-54091","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates","tag-commodities","tag-middle-east","tag-oil","tag-trading-strategies","tag-volatility"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/54091","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=54091"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/54091\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/41760"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=54091"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=54091"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=54091"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}