Brent crude oil reaches a two-month high amid geopolitical tensions

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Brent crude oil prices rose to $86 per barrel on Tuesday, marking the highest level in two months. This increase was driven by rising geopolitical risks in Eastern Europe and the Middle East, particularly the ongoing confrontation between Israel and Hamas, which shows no signs of abating despite the intervention of international mediators backed by the United States.

On the demand side, uncertainties persist. China, the world’s largest oil importer, continues to face significant economic challenges, contributing to volatile market sentiment. The retail sector in China is under pressure following disappointing mid-year online sales results, with Chinese consumers showing reluctance to spend amid concerns about personal wealth, the ongoing real estate market crisis, delayed wages, and high youth unemployment. These factors are critical as they endanger China’s GDP growth target of around 5% for the year.

Technical Analysis of Brent

In the 4-hour chart, Brent is currently advancing towards the level of $86.50, identified as the immediate target. Once this level is reached, a possible correction to $81.60 could occur, testing from above. Subsequently, the market could start a new wave of growth aiming at $89.00, with potential to extend up to $94.00. This bullish outlook is supported by the MACD indicator, whose signal line is above zero and rising sharply.

In the one-hour chart, Brent found support at $84.00 and is now progressing through the final stages of the current growth wave. The market has already reached the $85.24 mark. We anticipate the formation of a narrow consolidation range around this level, with a breakout above that could lead to further growth towards $86.50. This scenario is technically reinforced by the Stochastic oscillator, with its signal line positioned above 20 and preparing to rise to 80.

Investors should closely monitor developments in geopolitical hotspots and economic indicators from major economies such as China and the United States, as these could significantly influence oil prices. The current trajectory suggests a bullish momentum for Brent crude, but the volatile nature of geopolitical events and economic data releases warrants cautious optimism.