Brent Oil Rally Not Yet Secure, Potential for a Downturn Begins to Appear
Brent's price hovering around US$94.73 puts the market in an area vulnerable to a short-term correction. After surging more than 5% earlier in the week due to renewed tensions between the US and Iran, Brent is trading in a higher area, causing market participants to weigh whether the rally still has potential or is opening up room for a pullback. Reuters reported that Brent briefly rose to US$95.19 on Monday, April 20, 2026, after previously plunging more than 9% on Friday when the market was initially optimistic about the possibility of negotiations and the opening of the Strait of Hormuz.
The potential for Brent to decline is not because geopolitical risks have disappeared, but because the market is highly sensitive to changes in headlines. Reuters noted that the latest spike was triggered by the US seizure of an Iranian vessel, threats of retaliation from Tehran, and the re-closure of the Strait of Hormuz. However, Reuters also emphasized that the current price reaction is largely driven by changes in political statements, not solely by stable fundamental changes on the ground. Under these conditions, if there is no new escalation, the market is likely vulnerable to profit-taking after a sharp spike.
On the other hand, the potential for a correction also arises, as the market has previously demonstrated how quickly risk premiums can disappear. On April 17, 2026, Brent closed at US$90.38 after Iran briefly declared the Strait of Hormuz open to commercial shipping during a ceasefire, triggering a daily decline of more than 9%. This suggests that when the market perceives a signal of de-escalation or the opportunity for new talks, Brent can fall rapidly, even if the physical disruption has not fully resolved.
In conclusion, at 94.73, Brent is still supported by a risk premium, but it is also beginning to face the threat of a correction. As long as the Strait of Hormuz remains disrupted and the conflict persists, downside is likely limited. However, if no new escalation headlines emerge, or the market re-seizes the opportunity for negotiations, Brent has room to decline from its current high. This inference is supported by Brent's extreme volatility in recent days and the rapid price reversals following shifts in geopolitical sentiment.
Cause:
Brent has just surged sharply, making the market vulnerable to profit-taking.
Current price movements are heavily influenced by rapidly changing geopolitical headlines.
Brent has previously been shown to fall rapidly when signals of Hormuz opening and the possibility of negotiations emerge.
The current price area is near the high zone after a significant rebound from last Friday's decline. This is inferred from Reuters price levels and sharp reversals between sessions.
Things to Watch:
Is there a new escalation in Hormuz or is it a signal of further talks?
Is Brent able to hold the US$95 area or lose momentum again? This is inferred from Reuters trading levels this morning.
Shipping flows and the physical condition of oil distribution in the Strait of Hormuz.
Potential profit-taking after the rapid price surge in the last few sessions. This is a market inference supported by Brent's volatility from Friday to Monday. (Zaf)
Source: Newsmaker.id
