Introduction
CL has dropped 8.7% in three sessions, from the 88 high on 21 August down to 80.30, and price is now getting close to testing the lower boundary of the symmetrical triangle that has contained it since late May. That boundary sits near 79, with the faster moving average at 77.87 just beneath it. The upper boundary is near 84. Both lines converge in early September, so this range resolves inside roughly two weeks either way. A close below 79 opens 74.50. A close above 84 puts the 88 high back in play.
The Sanctions Reversal, in Context
- Oil finished last week more than 5% higher after Treasury Secretary Scott Bessent said Washington would impose the “toughest sanctions in history” on Iran.
- Prices reversed Monday and Tuesday, falling 2.4% then 3%, after the sanctions stopped short of immediately targeting major Chinese financial institutions and weekend reports showed crude still moving through the Strait of Hormuz.
- Diplomatic signals added pressure. Pakistan’s army chief visited Tehran with a proposal involving sanctions relief under the existing memorandum, Qatar continued mediation, and Washington signalled it may return evacuated diplomats to the region.
The bigger picture: traders are pricing economic sanctions as less disruptive to near-term supply than military escalation. CBA sees Brent between $70 and $100 through the second half of 2026, and estimates Hormuz flows recovering to just 50-60% of pre-war volumes would be enough to revive oversupply expectations.
Possible Trades
Bearish breakdown
- Entry trigger: daily close below 79
- Stop: above 81.30
- Target: 74.50
Bullish breakout
- Entry trigger: daily close above 84
- Stop: below 80.07
- Target: 88
Keep an eye on the 50 moving average and the lower end of the symmetrical triangle, there should be support at that level, whether it is strong enough, time will tell. The crude oil market is being driven completely by what is going on in the Middle East, so any technical levels can be completely blown out if there is news coming out from the Strait of Hormuz, etc.
Trading futures involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. This analysis is for informational and educational purposes only and does not constitute financial advice. Always conduct your own due diligence and consult with a licensed financial advisor before making any trading decisions.
