Natural Gas and Oil Forecast: Strait of Hormuz Crisis Spikes Oil to $119 – Time to Short or Buy?

Key Points

• A $30–$50 risk premium hits oil as the Strait of Hormuz faces a potential 20% global supply blockage.
• The "Dark Cloud Cover" candle signals a shift from a bull run to a correction, testing the $101 mark.
• Natural Gas prices target the 200-day SMA near $3.15, establishing a higher low as bullish momentum builds.

Market Overview

The global energy market is experiencing significant turmoil, often described as a "full-on geopolitical shock." Predictions of a surplus in 2026 have been overshadowed by emerging concerns over supply shortages.

Brent and WTI oil prices have surged to multi-year highs, surpassing $119.50, primarily due to a risk premium of $30 to $50 per barrel added to current prices.

Underlying Causes of Volatility

• Supply Erosion: The Strait of Hormuz, which handles 20% of the world’s oil trade, is facing a near-total blockage. Additionally, oil production in southern Iraq has dropped by 1.3 million barrels per day.
• Structural Deficits: Iran's output of 3 to 4 million barrels daily is under threat, prompting major oil producers like Saudi Arabia to offer rare spot crude sales to stabilize the market.
• Macroeconomic Fallout: The price spike has triggered a panic sell-off in the stock market, with Dow futures dropping over 1000 points as fears of recession and inflation grow.
• Strategic Shift: Earlier forecasts predicting a surplus of 1 to 3 million barrels per day have been rendered obsolete due to export blockages and force majeure declarations.

Natural Gas Price Forecast

Natural Gas has reached a four-week high near $3.47, influenced by the Middle East situation. It has established a higher low and is currently consolidating above the 0.236 Fibonacci retracement level of $3.36.

If resistance is broken, prices could target the 200-day SMA near $3.15, which has shifted from resistance to support. The RSI indicates bullish momentum but is nearing overbought conditions, suggesting a potential pullback to the $3.28 (0.382 Fib) region before further upward movement.

Trade Idea

If Brent Crude holds above $107, a retest of $119.50 could be anticipated. Alternatively, consider a long position on Natural Gas if it breaks above $3.50.

Crude Oil Price Forecast

WTI Crude Oil has experienced volatility, reaching $119.49 before a "Dark Cloud Cover" candle indicated a potential correction. The price is now testing the $101.76 mark, a significant psychological level.

The previous upward trendline has broken, suggesting a transition from a bull run to a correction. A descending triangle appears to be forming, with the 0.382 retracement ($101.87) acting as a critical support level. A failure to hold above $100 could lead to a drop to $96.43.

Trade Idea

Watch for a bounce at $96.43 (0.5 Fib level) to re-enter long positions targeting $113.12.

Brent Oil Price Forecast

Brent Crude recently peaked near $119.49 before correcting. The technical indicators show a significant "Engulfing" red candle that has pushed prices below the 0.236 Fibonacci retracement level at $110.50, indicating a loss of momentum.

Currently hovering around $107.40, Brent is testing a trendline. If this fails, the next major support is at the 0.382 Fibonacci level of $104.94. A break below this could lead to further declines to $100.42.

Trade Idea

If $104.94 breaks, consider a short position targeting $100.42.