Geopolitical Tensions vs The Threat of a Surplus: Who Will Win?
Brent crude traded steadily with a slight downward trend in today's trading, hovering in the range of USD 67.24–67.32 per barrel. After plunging more than 2% in the previous session due to profit-taking, the current rally was driven by geopolitical tensions and market concerns about the United States' new tariff policy.
According to a Reuters report, investors are currently focused on two major issues: the potential impact of US import tariffs on India and the escalating conflict in Ukraine.
US Tariffs on India: The United States government has imposed import tariffs of up to 50% on a number of goods from India. This policy has fueled global supply uncertainty, given that India is a major importer of Russian oil.
Ukraine–Russia Tensions: The ongoing conflict has fueled concerns about energy distribution disruptions, boosting oil prices.
However, long-term factors are dampening market optimism. In its report, Goldman Sachs estimates that Brent prices could potentially fall to the low-$50s per barrel by the end of 2026. This prediction is based on expectations of a global oversupply of up to 1.8 million barrels per day and an increase in oil reserves of approximately 800 million barrels.
Key levels are at 66.44 and 68.17.
Technically, indicators across various timeframes show strong buy signals, supported by moving averages that remain in a positive trend.
Nearest support: USD 66.44 – USD 65.59
Key resistance: USD 67.10 – USD 68.17, with the 200-day moving average around USD 69.13.
If the price breaks through the USD 68 resistance level, the potential for strengthening to the USD 70 area is wide open. Conversely, a drop below USD 65 could trigger a deeper correction.
In the short term, the oil market has the potential to remain volatile with a bullish trend due to geopolitical factors. However, projections of a supply surplus and a global economic slowdown pose a threat to the upward trend in the medium to long term.
Source: Newsmaker.id
