Brent crude rose more than 4% on Thursday to a two-week high as traders repriced geopolitical and weather-driven supply risks. Attacks on shipping in the Gulf and the Strait of Hormuz intensified, even as earlier reports put recovered flows at 81% of the pre-war level; meanwhile, a hurricane forced the shutdown of a number of US oil installations, curbing oil and gas output. The conflict backdrop also deteriorated, with the Yemen theatre escalating, Syria indicating potential support for Saudi Arabia, and fresh signals that the US and Israel are prepared to strike Iran again, pending final approval from President Trump.
The rally pushed Brent above $105 a barrel for the first time since 25 September, retracing more than 61.8% of the $109.77 to $95.11 decline and clearing the 1 October recovery peak at $103.95. On the daily chart, repeated defences of bull-trendline support were followed by a shift to a fully bullish configuration of DMAs, while 14-momentum moved into positive territory. Resistance is cited at 105.46, 106.31 (Fibo 76.4%), 108.22 and 109.40, with support at 103.37, 102.44, 101.98 and 100.76; a sustained break above 103.95 is referenced as the level to maintain upside pressure towards 106.31, then 108.22 and the 110 resistance zone.
Strategy and Positioning for Further Upside
We should position ourselves for further upward momentum in Brent crude as prices break past the critical $105 per barrel threshold. This sudden 4% surge is heavily backed by real-world supply vulnerabilities, particularly with the Strait of Hormuz carrying nearly 20% of the world’s daily petroleum liquid consumption. Derivative traders should look to establish long positions on short-term pullbacks, targeting the next major resistance level at $106.31.
With geopolitical tensions escalating rapidly in the Middle East, we anticipate heightened intraday volatility in the coming weeks. Historical data shows that military escalations in this region can quickly add a premium of $5 to $10 per barrel to global oil prices. We recommend utilizing tight stop-loss orders just below the new support floor of $103.37 to protect capital against sudden diplomatic breakthroughs or market reversals.
Supply Disruptions and Technical Outlook
On the supply side, recent severe hurricanes have heavily disrupted Gulf of Mexico offshore production, which typically accounts for about 15% of total US crude output. These unexpected shutdowns mean global inventories are tightening at a time when OPEC+ production cuts are already keeping the market thin. We suggest focusing on short-term call options to capture the premium from this temporary domestic supply squeeze.
The daily technical charts show that daily moving averages have aligned into a strong bullish setup, while momentum has firmly crossed into positive territory. If Brent manages to stay consistently above the $103.95 level, we expect the rally to easily extend toward $108.22 and eventually test the key $110 resistance zone. Traders should monitor these technical triggers closely on their charting software to optimize entry and exit timing.
