Oil extends gains on fears of renewed US-Iran military tensions
Oil prices are rising on Monday, extending the 10% gains from last week amid rising geopolitical tensions.
President Trump warned Iran that the clock is ticking and that there “won’t be anything left” if there is no progress soon in the stalled U.S.-Iran talks. Furthermore, reports suggest that Israel and the U.S. are actively advancing military preparations to resume attacks against Iran. This raises the risk of further escalation in the Middle East, boosting crude oil prices.
Talks between the U.S. and Iran have failed to progress owing to disagreements over Tehran’s nuclear programme.
The Strait of Hormuz also remains effectively closed, while inventories are being drained at the fastest pace outside a major emergency, raising supply concerns.
There is a growing sense since last week that traders have stopped waiting for a deal, and the market is becoming increasingly concerned over the lack of a resolution.
Meanwhile, a firmer U.S. dollar could cap the upside for crude oil prices. The dollar trades around its highest level in five weeks amid renewed U.S.-Iran tensions, which are fueling safe-haven demand, alongside strong U.S. economic data that has increased bets on further rate hikes from the Federal Reserve.
Oil forecast – technical analysis
Oil continues to be guided higher by the 50 SMA, forming a series of higher lows, signalling that bulls are buying the dips. The price recovered from a recent low of 97.20 at the 50 SMA, rising back above 100, and has extended those gains today to test 104.30, close to the 23.6% Fibonacci retracement of the 55–120 move at 105.00. The RSI is also rising, which, combined with the hold above the 50 SMA, keeps buyers hopeful of further upside.
Buyers will look for a move above 105 to bring 111 into focus, the April 30 high. Above here, attention turns to 120, the 2026 peak.
Sellers, however, could be encouraged by the long upper wick on today’s candle. Immediate support can be seen at 100. A break below here exposes the 50 SMA at 97.20, while below that, 95 comes into focus, marking the 38.2% Fibonacci level. Beneath this, sellers will turn their attention to the 50% Fibonacci level at 88.00.
DAX falls as oil prices and inflation worries rise
The DAX, along with its European peers, opened lower on Monday but has recovered from session lows.
The market remains cautious amid concerns over escalating U.S.-Iran tensions following President Trump’s warning over the weekend and fears of potential military action.
With the U.S.-Iran conflict entering its third month, Tehran and Washington remain unable to reach a resolution, while the Strait of Hormuz stays closed. Rising energy prices have fuelled inflation fears and increased expectations of further rate hikes from global central banks. Global bond yields are soaring, keeping pressure on equities.
Given Europe’s dependence on oil imports, European equities have struggled to return to pre-war levels, unlike U.S. equities, which have rebounded on AI-led optimism.
Looking across the week, the main focus will be Thursday’s PMI data after business activity slipped into contraction territory in April and is expected to remain there in May as the stagflationary impact of higher energy prices takes hold.
DAX forecast – technical analysis
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