- Brent crude oil price predictions have turned bearish as the announced truce between the US and Iran blows away the oil shock risk premium.
Current Setup and Live Chart
Brent crude oil price predictions have undergone a dramatic bearish shift following the weekend announcement of a US-Iran truce to be signed this Friday. The truce has caused the 3-month oil shock risk premium to evaporate overnight, leaving crude oil prices to trade within a peace-deal and potential supply-normalization environment.
Following the bearish turn, Brent crude now trades between $81 and $ 82 per barrel, representing its lowest price in three months. The peace deal also allows the reopening of the Strait of Hormuz, the critical oil conduit to the Southeast Asian axis that includes China and India, which are among the top 3 oil importers. Brent crude oil price predictions suggest prices could still decline further once the impact of the normalization of oil shipping is felt in markets.
Brent Crude Oil Price Predictions: Macro Drivers
1) Evaporating Oil-shock Risk Premium
The crude oil market is currently aggressively unwinding the oil-shock risk premium. Brent crude has shed nearly 6% this week, and altogether is now in a 4-day losing streak.
2) Hormuz Reopening Expectations
The next phase in unwinding the oil-shock risk premium comes with the reopening of the Strait of Hormuz. This will ease concerns over oil shipping and improve supply. Goldman Sachs has adjusted its Brent crude oil price forecasts lower following the developments, as export flows start to normalize across the Strait.
3) Chinese Demand
Attention will once more shift to the previous market fundamentals once the oil shock risk premium has evaporated. Chinese demand and broader global growth concerns top the list of oil market fundamentals.
Crude Oil Price Catalysts for the Week
1) Progress on the U.S.-Iran agreement: Traders will keep watching headlines on the progress of the negotiations that will lead up to the signing, as well as other issues on which negotiations are still being carried out (such as Iran’s nuclear ambitions). Headlines indicating progress in negotiations will sustain the bearish push in Brent crude. On the other hand, any stalls or breakdowns in negotiations could reintroduce the risk of an oil shock.
2) Strait of Hormuz shipping status: Shipping flows will take time to normalize, and the impact of these flows will also take some time to be felt in the markets. This makes the timing of a full reopening of Hormuz critical. The earlier and faster oil export flows normalize, the tougher it will be for oil prices to reclaim levels above $90 per barrel.
3) China’s demand data: With the oil shock risk premium being unwound, market attention will shift to Chinese demand as a proxy for global growth metrics. Weaker-than-expected import data keeps the bearish narrative intact.
Brent Crude Oil Price Prediction Scenarios
Base case: Price action will remain bearish to neutral, with pressure on oil prices expected to persist. This will bring sub-$80 price targets into focus in the coming days as the oil shock risk premium dissipates.
Bull case: We only see a bull case scenario if there is a breakdown in further negotiations, renewed strikes on Iran, or the Strait of Hormuz remains closed to pre-war levels. This scenario could see Brent crude retest price levels above the $90 mark.
Bear case: Full reopening of the Strait of Hormuz, weaker Chinese demand, and undisrupted negotiations that settle all dispute points make a bear case scenario more likely. In this scenario, Brent crude targets around the mid-$70s may come into view.
Brent Crude Technical Analysis
The bearish flag pattern is now confirmed, and the measured move from the breakdown of the flag’s lower boundary at 92.80 is now complete. The current support at 80.27 is now being tested. The bulls will need to protect this support for oil prices to rebound. If this is the case, the 86.34 resistance and the prior low of 17 April 2026 come into play. If this barrier is uncapped, a further recovery reclaims 92.80 first, and later 100.19 if the advance move also uncaps this barrier. The uptrend is only restored if oil prices take out the 120.00 psychological resistance, unlocking access to a multi-year high at 124.47.
On the flip side, an extension of the current retracement below 80.27 unlocks access to the 73.07 price mark, site of the 27 February top. This was the last day before the onset of the US-Iran war and the attainment of this price level closes the bullish gap from 28 February. The 30 June 2025 and 2 February 2026 lows at 65.61 become the new downside target if 73.07 collapses under bearish pressure.
