Oil Prices Dip, Brent Still Overshadowed by Conflict

Global oil prices weakened during Monday’s trading (October 26), with Brent crude falling toward US$109 per barrel—down from a six-month high—while West Texas Intermediate (WTI) hovered around US$101 per barrel. This correction occurred as the market reassessed developments in the US-Iran conflict, alongside technical indicators suggesting an "overbought" condition.

Technical pressure became more apparent after Brent’s 14-day Relative Strength Index (RSI) climbed above 74 on Friday, surpassing the 70-level threshold typically viewed as an overbought signal. This set the stage for profit-taking, following a surge of more than 85% in Brent prices year-to-date, driven by supply disruptions linked to conflicts in the Middle East.

Despite the price correction, geopolitical risks remain a primary pillar supporting oil prices. US President Donald Trump reiterated that Washington must decide whether to pursue an agreement with Tehran or adopt a tougher stance, while Iranian Deputy Foreign Minister Abbas Araghchi stated that his side still hopes to avoid further attacks. Meanwhile, hostilities between the Houthis and Saudi Arabia also intensified over the weekend.

The market is growing increasingly cautious ahead of a series of major events—including elections in Israel, a Federal Reserve meeting, and the US midterm elections in early November. Concerns that conflicts could escalate further following these political events have kept a "risk premium" embedded in oil prices, even as the flow of supplies through the Strait of Hormuz begins to recover toward pre-war levels.

On the other hand, a recovery in oil shipments from the Middle East could cap price gains in the short term. However, analysts suggest that any new escalation disrupting supply flows could push Brent higher once again—potentially even fueling talk of the price reaching US$150 per barrel, should the supply disruption be severe enough to trigger a significant drop in global demand.