Oil markets have witnessed sharp price fluctuations recently. On Monday, prices surged to $80.34 per barrel — the highest level since January 21, 2025 — before retreating to close near $70, marking a daily drop of around 9%.
The Oil Volatility Index (OVX), often referred to as the “fear gauge” for oil prices, reached 74.41 points last week — its highest since March 9, 2022 — and is currently hovering near 54 points. This indicates elevated volatility, driven largely by ongoing geopolitical developments between Israel and Iran, as well as rising tensions between the United States and Iran following U.S. airstrikes on three Iranian nuclear sites. Iran responded with a limited attack on U.S. military bases in Qatar and Iraq, causing no casualties or injuries.
Following these events, U.S. President Donald Trump stated, “The time has come for peace,” announcing the end of the Israeli-Iranian conflict. Markets are now awaiting official confirmation of a ceasefire, which contributed to the sharp decline in oil prices today, bringing them below the $70 mark to $68.20 per barrel.
Despite the pullback, oil prices have climbed approximately 27% from their recent low of $58.75 on May 5 to yesterday’s peak. However, they remain down about 7% year-to-date amid continued uncertainty weighing on the market, influenced by a mix of conflicting factors.
In a significant development, Iran’s parliament recently passed legislation calling for the closure of the Strait of Hormuz — a critical chokepoint through which nearly 20% of global oil and gas supply passes. This move could have major consequences for oil prices; analysts warn that if the strait is actually closed, prices may surge above $100 per barrel.
Goldman Sachs has projected a sharp spike in oil prices if flows through the Strait of Hormuz are disrupted. The bank estimates that a drop of 1.75 million barrels per day in Iranian exports could push oil to $90, while a 50% reduction in Hormuz shipments could drive prices to $110 per barrel.
From a technical standpoint, the Relative Strength Index (RSI) is currently around 50, indicating a neutral momentum. Meanwhile, the MACD shows a bullish crossover, with the blue MACD line crossing above the orange Signal Line — a sign of positive momentum in oil price movements.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
