Oil News: Russia-Iran Tensions Lift Supply Risks While $71.53 Resistance Caps Gains

What’s Moving Oil Prices Lower Today?

Light crude oil futures edged lower on Monday, retreating from earlier highs as traders responded to technical resistance at $71.53, a key 50% retracement level. Prices peaked at $71.48 before declining to $70.87, indicating a lack of sustained buying momentum.

The 50% retracement at $71.53 remains pivotal, dictating market direction. A breakout above this level could trigger a rally toward the $72.78 recent high and the 200-day moving average at $73.09. Conversely, failure to surpass $71.53 signals bearish sentiment, with initial support at the 50-day moving average of $70.23. A breakdown below $70.23 could expose prices to deeper declines, targeting $69.11 based on Fibonacci projections.

Will Geopolitical Tensions Support Oil Prices?

Geopolitical risks continue to underpin crude oil prices, driven by escalating tensions involving Russia and Iran. Last week, oil benchmarks posted their largest gains since September, bolstered by fears of supply disruptions after Russia fired hypersonic missiles at Ukraine. These developments are seen as a response to Western military support for Kyiv, intensifying supply concerns.

Further stoking fears, Iran responded to a U.N. nuclear watchdog resolution by advancing its uranium enrichment capabilities. Analysts suggest this escalation increases the probability of U.S.-enforced sanctions on Iranian oil exports, potentially sidelining up to 1 million barrels per day—approximately 1% of global supply.

Iran has agreed to hold talks with European powers regarding its nuclear program on November 29. However, market participants remain cautious about the potential for sanctions enforcement and its implications for global supply chains.

How is Demand in China and India Shaping the Market?

Demand-side factors also play a critical role in stabilizing oil prices. China, the world’s largest oil importer, increased crude imports in November as lower prices incentivized stockpiling. Similarly, Indian refiners boosted throughput by 3% year-on-year in October, driven by strong fuel export activity.

These trends suggest resilient demand in Asia, mitigating some downside risks for oil prices despite geopolitical and technical pressures.

Where Are Oil Prices Headed Next?

Crude oil prices are likely to remain range-bound in the short term, with geopolitical tensions and technical levels shaping market moves. A sustained breach above $71.53 could drive a bullish scenario, targeting $73.09. However, a failure to hold above $71.53, coupled with increased bearish sentiment, could see prices retest support at $70.23 or fall further to $69.11.

Traders will also focus on upcoming U.S. personal consumption expenditures (PCE) data, as its influence on Federal Reserve policy could sway broader market sentiment, indirectly affecting crude oil demand. The outlook for the week leans bearish, pending clarity from geopolitical developments and demand cues.

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