Oil Prices Surpass $120: Iran Blockade and Stalled Negotiations Take Effect

Although the news headline indicates that oil prices have exceeded $120, technical indicators point to a short-term downward trend. The RSI is approaching oversold territory at 35.8, but the MACD remains below the signal line and in negative territory. The price is trading below both the 20-day (109.05) and 50-day (111.09) moving averages. The 5% drop in the last 24 hours suggests that geopolitical risks may have been priced in, and profit-taking could continue in the near term. Therefore, despite the upward momentum generated by the news, the technical picture remains weak.

The sharp decline in oil prices and weak technical indicators suggest that downward pressure may persist in the short term. Although the RSI is approaching oversold territory at 33, the MACD remaining below its signal line and trading below the 20- and 50-day moving averages confirm the downtrend. Despite geopolitical risks in the news headlines, the market appears to have priced in this news at current price levels. A pullback toward the $95 support level is highly likely in the near term.

The sharp increase in oil prices is a direct positive catalyst for energy companies such as Exxon Mobil. Technical indicators also support this view: the RSI is in positive territory at 60, the MACD is above its signal line, and the price is trading above both the 20-day and 50-day moving averages. The upward trend is expected to continue in the short term, but caution is warranted as the market approaches overbought levels, which could trigger profit-taking.

The sharp increase in oil prices is creating a positive catalyst for energy stocks such as CVX. Technical indicators also support this view: the RSI at 55 is in neutral territory but retains upside potential, while the MACD remains above its signal line and is trending positively. The price trading above the 20- and 50-day moving averages confirms a short-term upward trend. However, I believe the rally may be limited due to geopolitical risks already being priced in and potential profit-taking.