Brent crude oil has retested its recent highs, with three-day momentum back at the overbought readings that marked the year's two previous peaks. Oil election risk now cuts both ways, as the upcoming U.S. and Israel elections raise the prospect of near-term escalation before any longer-term deal takes shape. Ongoing attacks on energy infrastructure keep that escalation path open. Declining oil demand growth expectations and the waiving of Russian sanctions, in contrast, are adding weight to the pullback case for crude.
Razan Hilal, CMT, StoneX Media Market Analyst, has spent seven years analyzing forex, stocks, commodities and equity indices as a Chartered Market Technician. Her coverage centers on technical and intermarket analysis, tracking how geopolitical risk and energy fundamentals show up across crude oil and energy equity charts.
Key Themes
Brent crude oil momentum is retesting overbought levels that marked the year's previous highs.
Russian sanctions waivers and slowing oil demand growth add to pullback risk in Brent crude oil.
The U.S. and Israel elections raise near-term escalation risk ahead of a possible longer-term deal.
Watch the Full Video
Oil Election Risk Tilts Toward Near-Term Escalation Before a Deal
The upcoming U.S. and Israel elections have made oil election risk a defining input for Brent crude oil, splitting the outlook into separate escalation and de-escalation paths. A sustained breakout in Brent crude oil would line up with the broader geopolitical escalation scenario, opening the path to multi-decade highs and steeper inflation concerns across the globe. Ongoing attacks on energy infrastructure keep that upside scenario live. "With the approach of the U.S. and Israel elections in the coming weeks, we may be looking at potential near-term escalation before a longer term deal possibly develops on the horizon," Hilal says. For oil traders, the sequencing matters, since the energy market may price a different risk before the votes than after them.
Brent Crude Pullback Risk Grows as Russian Sanctions Ease and Demand Slows
Brent crude oil carries a fundamental counterweight to election-driven escalation risk, as Russian sanctions waivers and declining oil demand growth expectations build the case for a pullback. According to Hilal, "Trump waiving Russian sanctions and declining oil demand growth expectations, which are possibly contributing to that potential reversal in line with possible profit taking opportunities" are weighing on crude as momentum retests overbought territory. The Energy Select Sector SPDR Fund (XLE) shows a similar strain, breaking above an 18-year resistance while a bearish divergence with its monthly RSI raises the risk of another false breakout. A sustained breakdown in Brent crude oil would, in turn, align with a de-escalation narrative across the energy market and could ease inflation concerns globally toward year end.
--- Written by Frédéric Guétin, StoneX Media Producer
--- Expert: Razan Hilal, StoneX Media Market Analyst
Energy
StoneX TV content is created, produced, and distributed solely by StoneX Media Ltd (“StoneX TV”) and is provided for informational and educational purposes only. StoneX TV does not provide investment, financial, legal, or tax advice and does not make any recommendation or endorsement of any investment strategy, transaction, or financial instrument. Nothing in this content constitutes, or should be construed as, investment advice or a recommendation to buy, sell, or hold any financial instrument, including securities, futures, derivatives, digital assets, foreign exchange products, or CFDs. This content does not constitute an offer, invitation, or solicitation to engage in any investment activity. The information presented is general in nature and is not tailored to the financial situation, investment objectives, or risk tolerance of any specific person. You should not rely on this content as a substitute for independent professional advice. Investing and trading in financial instruments involves significant risk of loss and is not suitable for all investors. Past performance is not indicative of future results. Any views or opinions expressed are those of the presenter at the time of publication and are subject to change without notice. Such views may not necessarily reflect those of StoneX Media Ltd or its affiliates. StoneX Media Ltd and its affiliates, including StoneX Group Inc., may from time to time have positions in, or engage in transactions involving, the financial instruments referenced. This content may include general market commentary and opinion. It does not constitute independent investment research and has not been prepared in accordance with legal requirements designed to promote the independence of investment research. StoneX Media Ltd is not authorised or regulated to provide investment services and does not act in a fiduciary capacity. StoneX Media Ltd is incorporated in Ireland and operates in accordance with applicable Irish law. It is a wholly owned subsidiary of StoneX Group Inc. and is a separate legal entity from other subsidiaries within the StoneX Group, which may be regulated in various jurisdictions. StoneX Media Ltd does not act on behalf of, or provide services for, any regulated affiliate. This content is not directed at, and may not be distributed to, any person in any jurisdiction where such distribution would be contrary to local laws or regulations. Supporting documentation for any claims, comparisons, statistics, or technical data may be made available upon reasonable request, where applicable.
Discover more insights
Our subscribers have access to comprehensive market analysis from StoneX spanning commodities, equities, currencies and more.
Our market expertise, advanced platforms, global reach, culture of full transparency and commitment to our clients’ success all set us apart in the financial marketplace.
Reach
With access to 40+ derivatives exchanges, 180+ foreign exchange markets, nearly every global securities marketplace and numerous bilateral liquidity venues, StoneX’s digital network and deep relationships can take clients anywhere they want to go.
Transparency
As a publicly traded company meeting the highest standards of regulatory compliance in the markets we serve, our financials and track record are matters of public record. StoneX’s commitment to “doing the right thing over the easy thing” sets us apart in the industry and helps us build respect, client trust and new partnerships.
Expertise
From our proprietary Market Intelligence platform to “boots-on-the-ground” expertise from award-winning traders and professionals, we connect our clients directly to actionable insights they can use to make more informed decisions and achieve their goals in the global markets.
