13.07.202608:50 Forex Analysis & Reviews: The Era of One-Sided Trades Is Over: Iran Breaks Off Negotiations, Oil Storms Toward $79

Oil has returned to growth once again, and there are objective reasons for this. The current escalation in U.S.-Iran relations can no longer be ignored. While we are still far from full-scale hostilities, prices for raw assets are likely to slowly creep upward again.

The attack on a Kuwait oil rig over the weekend marked the first direct strike against energy infrastructure in several weeks. If the conflict expands into attacks on energy facilities in general, oil could rise to $100 per barrel. This attack on the offshore platform has created a new qualitative shift in the conflict, forcing traders to react. Kuwait stated that the platform was damaged amid retaliatory strikes by Iranian drones and missiles against U.S. allies across the Middle East, including Jordan and Qatar. Iran announced on Sunday that the strait would be closed "until further notice." The U.S. disputes this version: U.S. Central Command stated today that it struck dozens of targets on Sunday specifically to weaken Iran's ability to attack international shipping in the strait.

The reaction in prices was predictably sharp. Brent rose above $79 a barrel, continuing a rally of more than 5 percent last week, while WTI hovers around $74. Oil rebounded from its lows as uncertainty returned military premiums to prices, erasing part of the decline recorded in May and June after a temporary peace agreement that promised increased supply.

The International Energy Agency warned on Friday that the new escalation risks disrupting efforts to restore stocks, serving as a reminder of how high the stakes are for the global economy if the conflict drags on. European natural gas prices also rose amid concerns that escalation would hinder supplies: futures rose by up to 2.7 percent after an almost 8 percent increase last week.

Actual traffic data confirm the seriousness of the situation. Traffic through the Strait of Hormuz, which typically accounts for about one-fifth of global oil and liquefied natural gas supplies, was nearly zero on Monday, continuing a slowdown that began with the escalation of tensions last week. However, the United Maritime Information Center noted that the southern shipping corridor coordinated by Oman remains accessible, leaving at least a theoretical loophole for some supplies.

As for the current technical picture for oil, buyers need to claim the nearest resistance at $76.30. This will allow aiming for $78.70, above which it will be quite challenging to break through. The most distant target will be in the $80.20 area. In the event of a decline, bears will try to take control over $73.70. If they succeed, a range breakout will deal a serious blow to the bulls' positions and push oil to a low of $71.70, with the potential to move down to $69.58.