Brent crude breaks higher as US-Iran war halts oil shipments. These are the key levels to watch

Brent crude oil has surged to its highest level in over a year as the ongoing US-Iran war raises serious concerns over global oil supply. With tanker traffic through the Strait of Hormuz, a critical chokepoint for roughly 20% of the world’s seaborne oil, effectively grinding to a halt, markets are pricing in the risk of a prolonged supply disruption. Here are the key levels to watch.

Daily chart analysis

On the daily chart, Brent crude appears to have broken out of the multi-year downtrend that has defined price action since mid-2022. The recent impulse move to the upside has been sharp enough to shift structure, with the 200 SMA beginning to slope higher for the first time in years, a meaningful shift that suggests the longer-term trend could be turning.

When we last covered Brent crude in February, price was testing the $78-79 resistance zone. That level has since been broken and briefly tested the $85 resistance zone above before pulling back. The RSI is now at levels not seen since March 2022, reflecting the strength of this move. Crucially, there are no signs of divergence at this stage. The On Balance Volume (OBV) has broken into a clear uptrend, confirming that buyers are stepping in and driving this rally rather than it being a low-conviction move.

The fundamental backdrop is providing real fuel here. As the situation in the Middle East deteriorates and supply tightens, bullish momentum could continue to build.

4-hour chart analysis

Zooming into the 4-hour chart, the $78-79 zone held as support on the break and retest, reinforcing its significance as a key level. The 20 EMA and 50 EMA are well fanned out and trending higher, consistent with a market in a strong short-term uptrend.

One note of caution: the RSI is showing a potential bearish divergence, with price printing higher highs while RSI prints lower highs. That said, there are no signs of a breakdown in price structure, and the $78-79 support below remains intact.

An unfilled gap sits around $73.50, which could act as a magnetic level on any deeper pullback. If the $78-79 support holds, a push through $85 remains on the table. Should conditions in the Middle East continue to deteriorate, the next meaningful resistance zone could come in somewhere between $90 and $95.

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