Crude Oil Price Forecast: Worsening US-Iran Tensions Support Oil Prices Breaking Above $90, Can Brent Crude Return to $100?

TradingKey - As of the Asian session on July 20, Brent crude ( UKOIL) opened higher and moved higher today, attempting to break through the $90 mark during intraday trading, reaching a high of $91.42. WTI crude ( USOIL) also opened higher and moved higher, at one point scaling the $84 high during the session, indicating that international oil prices are strengthening under the impact of the worsening US-Iran situation over the weekend.

US-Iran Situation Continues to Deteriorate, Hormuz Shipping Risks Continue to Push Up Brent Oil Prices

From a fundamental perspective, the core driver behind today's surge in oil prices is the ongoing deterioration of tensions between the US and Iran.

According to the latest reports, the US and Iran continued to escalate their military operations over the weekend, with the US launching strikes against Iranian targets for nine consecutive nights, while Iran retaliated against US and allied targets in the Gulf region. As the scope of the conflict has extended from military facilities to ports, bridges, energy infrastructure, and commercial shipping, market concerns over the stability of Middle East crude exports have rapidly intensified.

The Strait of Hormuz remains a key variable for current oil pricing. The strait is one of the world's most important transit corridors for crude oil and liquefied natural gas (LNG), accounting for about one-fifth of global oil trade under normal circumstances. Once shipping in the region is disrupted, crude exports from Gulf oil producers, tanker insurance costs, transit times, and global refinery procurement schedules will all be affected. Recently, the US stated it is enforcing a naval blockade against Iranian ports, while Iran declared it will take action against vessels violating its navigation rules. The pressure applied by both sides on shipping traffic has further heightened market anxiety.

According to shipping data, transit through the Strait of Hormuz has slowed down significantly. LSEG data showed that only four vessels passed through the Strait of Hormuz on Sunday, down from eight the previous day, and the number of product tankers passing through the strait recently dropped to its lowest level since May. Although crude exports from Gulf nations had rebounded in the first half of July from June levels, the slowing transit as conflict re-escalates is weakening the bearish impact of the previous supply recovery.

However, the current rise in oil prices is still primarily driven by geopolitical risks rather than a broad improvement in global demand. Oil prices had previously been under pressure due to expectations of OPEC+ output hikes, the recovery of some Gulf exports, and demand-side uncertainties. Even as Brent breaks above $90 today, the market still needs to observe whether sustained disruptions to actual supply occur. If transit through Hormuz is not completely shut down and Gulf oil producers maintain exports through Red Sea ports or alternative routes, the room for further significant upside in oil prices may be limited.

Brent Crude Price Analysis: Focus on $91.30 Key Resistance Level

Brent crude oil price daily chart, Source: TradingView

Looking at the daily chart of Brent crude, oil prices found support at the $70 mark during the previous pullback and rebounded strongly on the back of geopolitical tensions. Today, prices briefly broke through the $90 level intraday, indicating that short-term market sentiment is leaning bullish under the influence of geopolitical developments.

Currently, oil prices have rebounded to just below the key resistance level of $91.30. Since this level also lies below the 60-day moving average, creating a confluence of resistance, short-term bullish momentum may weaken. If Brent crude's closing price can hold steady above $91.30 today, further upside will be unlocked, potentially testing the $98 resistance level or even rising to near $100.

Conversely, if today's closing price is below $91.30, oil prices may enter a short-term correction. The primary target for the pullback would be to fill today's gap of $88.27-$89.30 on the downside, and further down, it may test the $85 support level.