Brent crude oil price has suffered a harsh reversal in the past few days as the crisis in the Middle East eased. It plunged from a high of $80.13 on Monday to the current $67.9, its lowest level since June 11.
Other oil benchmarks have also plunged in the past few days, with the West Texas Intermediate (WTI) falling from a high of $77.53 to $65. So, what next for crude oil prices in the near term?
Brent crude oil price has plunged as the crisis eased
Crude oil prices have plunged in the past few days as investors reacted to the truce between Israel and Iran. This truce marked a significant de-escalation following the escalation of the bombing campaign. It also came two days after the US bombed key Iranian nuclear sites.
An escalation between Iran and Israel would have been highly bullish for oil prices, with some analysts calling for a surge to $100. This crash would happen for several reasons.
First, the US and Israel would likely target Iranian oil infrastructure, including terminals, which would lead to supply disruptions.
Second, Iran and its proxies, like the Houthi rebels would lead to disruptions in the Strait of Hormuz. Finally, the crisis would have an impact on demand because of its impact on key economies.
OPEC+ meeting coming up
The next key catalyst for the Brent crude oil price will be the upcoming OPEC+ meeting in which officials will deliberate about supply issues.
Analysts anticipate the cartel to announce a supply increase in the coming meeting. Precisely, they expect the members, supported by Russia, to boost production by 411,000 barrels a day as they have done in the past few weeks.
One reason for the supply increase is the goal to boost market share in the oil market. Further, there is anger that some members, like Kazakhstan have boosted their production above target.
Further, there are hopes among the cartel that oil demand remains strong and resilient to the ongoing trade issues.
Trade deals as Trump’s deadline nears
The other catalyst for Brent crude oil price is the upcoming tariff deadline by Donald Trump. This deadline is set for July 7, and the US has already reached a deal with China and the UK.
In a recent statement, Howard Lutnick noted that the US was about to sign agreements with at least ten countries. Those deals will be bullish for crude oil prices as they will point to more demand.
The most important deals will be with the European Union, Japan, South Korea, Canada, and Mexico.
Further, traders will watch the ongoing debate on Donald Trump’s Big Beautiful Bill. If passed, this bill could boost the US economy and oil demand by cutting taxes.
Brent crude oil price forecast
The daily chart shows that the Brent crude oil price has been in a strong bearish trend in the past few days. It has plunged from a high of $80 to the current $67.9, its highest level since June 11.
Brent crude has moved below the key support at $68.80, its lowest point in September 20. It has remained below the 50-day and 100-day moving averages, a sign that bears are in control.
Therefore, the most likely outlook is where crude continues falling as sellers target the key support at $60. A move above the resistance level at $68.80 will invalidate the bearish outlook.
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