Facts

• Brent crude oil contracts (OIL) rebounded from local lows near $102.5 reached on May 20 to around $106 on Thursday, May 21.
• Yesterday’s White House report indicated that Donald Trump is in the final stage of negotiations with Iran. Following those headlines, oil prices moved lower.
• IEA Executive Director Fatih Birol stated that commercial oil inventories are declining sharply and, at the current pace of consumption, could be depleted within “a few weeks.”
• According to the IEA, total global oil supply is expected to decline by around 3.9 million barrels per day in 2026 due to the war, compared with a previous forecast calling for a 1.5 million bpd decline.

Recommendation Position: Long position on OIL at market price

• Take profit: 112.5
• Stop loss: 102.5

Opinion The situation in the Middle East and around the Strait of Hormuz — and therefore also in the oil market — remains extremely tense, while there are still few visible signs of meaningful demand destruction. The White House strategy appears to be focused more on temporarily slowing oil price gains through carefully timed headlines regarding negotiations. However, recent comments from Iran and proposals from Iranian diplomats have remained firm and largely unchanged from the signals Tehran was already sending at the beginning of the conflict. The gap between the positions of both sides remains substantial. As a result, reports suggesting a “final stage of negotiations” do not necessarily imply that a ceasefire or peace agreement is approaching. Instead, they may indicate that military measures could again be considered by the United States if Washington remains determined to achieve its strategic objectives — namely reducing Iran’s ability to benefit from shipping traffic through the Strait of Hormuz and further limiting Iran’s nuclear program. If escalation fears return to the market, investors may once again begin pricing in a move toward recent local highs in oil prices, especially as the market enters the summer season, which historically generates peak oil demand. Inventories continue to decline rapidly, while the physical spot market remains extremely tight. We recommend a long position on OIL, with a target price of $112.5 and a defense stop loss order at $102.5. OIL chart (H1 interval)

Source: xStation5

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