Oil Gains as Peace Deal Delays Sustain Risk Premium

Key Takeaways:

*U.S.-Iran tensions and disruptions in the Strait of Hormuz are keeping Brent above $110, sustaining a strong risk premium.

*Restricted flows and ongoing inventory draws continue to underpin elevated prices and a firm near-term structure.

*A hawkish Fed may cap gains, while any breakthrough in negotiations could trigger a sharp pullback.

Market Summary:

Brent crude oil enters Wednesday’s trading session with significant upside momentum as the latest U.S.-Iran developments sustain supply concerns through the Strait of Hormuz, one of the world’s most critical energy chokepoints.

President Trump has instructed aides to prepare for an extended blockade of Iran, signaling unwillingness to accept Tehran’s recent proposal linking the reopening of the Strait of Hormuz to the lifting of the U.S. naval blockade. The standoff has kept shipping disruptions active despite earlier ceasefire hopes, limiting Iranian oil exports and tightening global supply. The Strait of Hormuz handles roughly 20-35% of global seaborne crude trade, and prolonged restrictions have triggered one of the largest oil supply shocks in recent history.

This development has kept Brent crude trading near or above $110 per barrel, with prices extending gains and remaining substantially higher than pre-conflict levels. Market participants remain cautious as stalled peace talks and the potential for further escalation continue to underpin a strong risk premium.

Analysts have revised forecasts upward due to slower-than-expected recovery in Hormuz flows. Brent is now expected to average around $104 per barrel in Q2 2026 under base-case assumptions of gradual resumption starting in May-June, though full normalization may not occur until late 2026. Some projections see prices holding above $100 for much of the year if disruptions persist, with upside risks from any renewed military actions or further shipping incidents.

While elevated energy costs support producers, they also raise global inflation concerns and could weigh on demand if economic growth slows. Inventory draws have been notable, adding to the bullish near-term structure.

With volatility elevated, participants are advised to monitor real-time developments on Hormuz shipping activity, inventory data, and diplomatic updates. Disciplined risk management remains essential amid these cross-asset influences.

Technical Analysis

Brent Crude Oil, H4:

Crude oil continues to trade within a well-defined uptrend channel, supported by strong bullish momentum following the recent breakout.

However, the commodity is approaching a key resistance level near $114.25—an area that has historically capped upside attempts and may attract renewed selling pressure. A sustained breakout above this barrier would be required to confirm continuation of the rally and open the path for further gains.

On the downside, failure to clear this resistance could result in a short-term pullback within the broader uptrend. Immediate support is located near $108.00, aligned with the lower boundary of the ascending channel.

Resistance Levels: 114.25, 119.65

Support Levels: 106.65, 101.00