Facts
- As of 14:12 CET on Friday, March 27, the OIL contract is up 3.9% at $103.9 per barrel.
- Oil has resumed its upward trend after a sharp drop to $92 on Monday, March 23, following comments from Donald Trump.
- According to Axios, the U.S. is assessing options to expand its offensive against Iran, including a potential ground operation and further airstrikes.
- Oil production outages in the Persian Gulf have reached nearly 11 million barrels, while French media report that around 40% of export capacity has been damaged.
- Oil inventories in the U.S. and across the OECD remain at historically low levels.
- Iran has not formally accepted the 15-point peace plan proposed by the United States and continues to seek control over the Strait of Hormuz.
Recommendation
Position: Long OIL at market price
- Take profit 1: 110
- Stop loss (SL): 96
Opinion
The conflict in Iran appears to be entering a critical phase that could shape the strategic balance in the Middle East. While Washington seems to be using all available tools to contain further increases in oil prices, underlying market fundamentals remain tight. With nearly 11 million barrels of production offline and significant damage to export infrastructure, supply risks remain elevated. Under normal conditions, an estimated 50–60% of capacity could be restored within 1–2 weeks, and up to 95–100% by year-end. However, ongoing escalation and the growing U.S. military presence in the region suggest that further disruptions are more likely than a rapid recovery in supply.
Market structure reflects these tensions. Oil spreads are at their tightest since 2022, pointing to a significant supply deficit. The current annual spread has widened to over $30, compared to a historical norm of around $10. Additionally, Donald Trump stated yesterday that Iran should not be allowed to impose transit fees through the Strait of Hormuz, while Tehran continues to assert its claim over control of the passage—highlighting conflicting strategic interests. Overall, the market remains highly constrained, with limited visibility on a near-term recovery in supply. Based on current conditions, we recommend a long position in OIL with a take profit at $110 and a stop loss at $96, with both levels derived from price action methodology.
Source: xStation5
