Oil futures have climbed more than 11% over two sessions, the largest two-day gain since April, after Iran struck three tankers near the Strait of Hormuz and the U.S. resumed heavy bombing. Energy shares ticked up as markets repriced supply risk.
Renewed hostilities between the U.S. and Iran over the Strait of Hormuz have pushed oil futures up more than 11% in two sessions, the largest two-day gain since April. Shares of energy companies ticked up as crude added to its advance.
Hormuz strikes reprice supply risk
The escalation began overnight, when Iran struck three tankers near the Strait of Hormuz. In response, the U.S. resumed heavy bombing of Iran.
According to MarketScreener, the shift toward renewed escalation has "led markets to reprice supply risk," said Adam Turnquist, chief technical strategist at LPL Financial. President Donald Trump said that trade and investment deals into the U.S. by Persian Gulf countries would replace the 20% shipping toll he announced Monday for cargo transiting the strait.
Technical signals point higher
The rally left a mark on the charts. Crude oil rallied to a high of $81.59 on Tuesday before meeting resistance and pulling back intraday. The move confirmed a bullish reversal above the lower swing high at $79.23, the first such break since the bottom at $67.73.
Analyst Bruce Powers put the next upside targets near the 50-day moving average at $86.70, with a symmetrical triangle trigger near $88.90. He noted that the 200-day moving average has been reclaimed as support near $75.11.
What comes next
The current advance marks the second leg up since crude broke out of a multi-year correction in March. Measured from the breakout level of $70.49, oil spiked more than 69% to a peak of $119.54 five days later. British oil major BP forecast further gains from oil trading but lower upstream production in the second quarter than in the first.
Sources: MarketScreener, FXEmpire
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