Oil prices supported by tensions in Middle East, risk premium driven

From Investing.com: 2025-06-23 07:13:00

Oil prices are retreating but remain supported due to Israel-Iran tensions and fears over Strait of Hormuz disruptions. The rally is risk-premium driven despite weak demand and rising OPEC+ supplies. Traders should remain nimble as oil approaches key resistance levels amidst uncertainty over Tehran’s next move.

Market volatility was seen as the US entered the Israel-Iran conflict, causing oil prices to initially gap higher before retreating. Short-term risk remains tilted to the upside as investors await Iran’s response. Demand growth is weak, but the focus is on escalating war tensions rather than supply and demand mechanics.

The situation in the Middle East remains tense as Iran’s options are limited in response to US involvement. The most significant concern is the potential disruption of the Strait of Hormuz, a vital oil passage. Iran’s parliament voted to close the strait, but the final decision is pending with the national security council.

Geopolitical tensions are overshadowing weak oil demand and rising supplies from OPEC+. Eurozone PMIs indicate poor demand strength. Trading oil in this environment requires caution and flexibility. The coming days will be critical, with potential for prices to rise further or de-escalate quickly based on geopolitical developments.

Technically, Brent faces resistance at $78.00 with support at $76.00 and $75.00. A break above $78.00 could lead to a test of $80.00, while a drop below $75.00 may push prices into the low $70s. Traders are advised to stay alert and adapt to the changing market conditions to navigate the uncertainty in oil prices.



Read more at Investing.com: Oil Holds Ground on Fear, Not Fundamentals – All Eyes on Tehran’s Next Move