Brent drops as Trump halts an attack and announces fresh talks. Has anything actually changed?

Key takeaways

• Brent fell by as much as 7% at Monday’s open before paring part of the move, after Trump said he had called off a planned attack on Iran.
• Tehran’s account differs. Iran says it is not currently negotiating with the US, and that its talks with Oman concern a shipping route rather than whether the strait reopens.
• Price has whipsawed back to the 85 area on the daily, where the 20 and 50 EMA sit, and that same level is the range equilibrium on the one hour chart.
• A break below the range lows could open 78, while a move above 90 could put 95 back in view.

Crude opened the week sharply lower. Brent fell by as much as 7% in early trade before recovering part of the move, and was down roughly 5% at the time of writing. That follows a month in which the contract gained close to 24%, its strongest monthly advance since March, as renewed hostilities between the US and Iran spread supply risk from the Strait of Hormuz into the Red Sea.

The trigger was a weekend announcement. Trump said he had called off a planned attack on Iran after Saudi Arabia, the UAE and Qatar urged him to pursue an agreement instead, and that a fresh round of negotiations would begin on Monday afternoon. He said any deal would cover the Strait of Hormuz first and Iran’s nuclear programme second, and would keep the waterway permanently open to international shipping.

Tehran has set out a narrower version of the same situation. Iranian officials said no negotiations with the US are currently taking place, and that the discussions under way are with Oman and concern a new route through the strait rather than whether it opens or closes, which they describe as a separate question. Iran also maintains that any arrangement would preserve its own control over the waterway, which is the point on which previous frameworks have broken down. Traffic through Hormuz remains close to non-existent, with tankers still being attacked and forced to turn back, and the US continues to enforce its blockade of Iranian shipping and ports. Adding to the move, major OPEC+ producers approved a further quota increase of around 188,000 barrels per day from September, completing the unwinding of the voluntary cuts agreed in 2023.

Brent daily chart

Brent daily chart showing price whipsawing back into the 85 area where the daily 20 and 50 EMA sit.

In our previous coverage of Brent we flagged the daily 20 and 50 EMA down at around 85, confluent with the high timeframe support zone beneath, as the area where buyers could potentially step in on a move lower. Price has now traded back into it.

Brent is continuing to whipsaw and is currently trading around that 85 level, where we have the daily 20 and 50 EMA. If the talk of a potential peace deal proves correct and valid, we could potentially see Brent coming back down to test the 78 level below. Until that is confirmed, and until news comes out of Tehran that they are supporting this initiative, Brent could potentially be hovering around this level, where we are currently seeing some consolidation.

Brent one hour chart

Brent one hour chart showing the consolidation range with equilibrium sitting around the 85 level.

Zooming into the one hour timeframe, we can see the consolidation more clearly, and we also see that we do have a clear range equilibrium area right around that 85 level. That price has been respected for the next direction on every move for Brent, and for the intraday traders out there this is most likely the range boundary that is going to be of most importance going forward.

A break below the range lows could potentially take us down to that support level mentioned in the daily analysis. A break above the range highs area would signal further escalation in the Iran situation, where a break above 90 potentially takes us up to that 95 area.

Key levels to watch

• 85 — the daily 20 and 50 EMA, and the range equilibrium on the one hour chart. The pivot for the next directional move.
• 90 — the one hour range high. A break above could signal further escalation.
• 95 — the high timeframe resistance area, back in view on a sustained break above 90.
• 81 — the one hour range low.
• 78 — daily support beneath, in view if a deal is confirmed and the range lows give way.

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