As the XBR/USD chart shows, Brent crude oil has made two significant moves recently:
- Last week’s price increase (A) followed President Donald Trump’s intentions to impose tariffs on India due to its purchases of Russian oil. This could have disrupted established oil supply chains.
- The price decline (B) may have been driven by both the decision of OPEC+ countries to increase production and reports of a weakening US labour market.
Thus, there is reason to believe that the more than 4.5% decline in Brent crude oil prices since the beginning of August reflects market participants’ scepticism about sustained high oil prices:
→ this has a negative impact on the US economy (JP Morgan analysts raised concerns about recession risks this week);
→ increased activity from oil producers may offset supply chain disruption risks.
Technical Analysis of the XBR/USD Chart
From a technical analysis perspective, Brent crude oil has dropped to a key support level (marked in blue), which was previously active in July. A rebound from this line could happen – in such a case, the price might face resistance at the Fair Value Gap area (marked in orange), formed between:
→ $70.81 – a support level active in late July, which was broken;
→ the psychological level of $70.00.
Attention should also be paid to price behaviour around the $69.00 level (indicated by arrows) – it quickly switched roles from support to resistance, indicating aggressive bearish sentiment. Given this observation, a potential bearish breakout attempt below the blue support line cannot be ruled out.
However, whether this scenario materialises will largely depend on developments in geopolitical risks and tariff agreements.
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