Crude oil price forecast amid rising optimism over the return of Iranian oil

Crude oil price pulled back from the multi-year high hit earlier in the week amid growing optimism on the return of Iranian oil into the market. Nonetheless, it will likely remain on an uptrend as traders continue to avoid Russian oil.

Iranian oil

Crude oil price has eased on its rally amid optimism that the Iran nuclear talks may conclude soon. The subsequent signing of an agreement to revive the 2015 nuclear deal would have the nation’s oil exports return to the market. Based on how tight the market is, Iranian oil may help curb the current rallying, which analysts forecast could reach and surpass $150 per barrel.

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The director general of IAEA, the world’s atomic watchdog, is set to hold a meeting with leaders in Tehran – the capital city of Iran – on Saturday. He is optimistic that the meeting will yield an agreement. Notably, the envoy in Vienna are of a similar opinion; expecting a deal to be reached by early next week. However, there are still some issues that need clarification; largely revolving around IAEA’s probing of undeclared nuclear sites in the region.

Russian sanctions

Even with the recorded sell-off, crude oil price will likely remain above $100 in the foreseeable future as traders continue to shun oil imports from Russia. This equates to 3 million barrels off a market that is already tight.  According to JP Morgan, Brent oil may reach $185 by year-end if the current conditions persist.

Crude oil price prediction

On Thursday, Brent oil rose to the highest level since May 2012 at 119.81 before pulling back to an intraday low of 109.47. It has since bounced back to the current level of 112.30. Notably, the benchmark for global oil has held steady above the psychological zone of 100 since the beginning of March.

On a four-hour chart, crude oil price is trading above the 25 and 50-day exponential moving averages. A look at both the fundamentals and technicals points to further gains in the ensuing sessions.

In the short term, I expect the commodity to trade within a horizontal channel of between the 25-day EMA at 108.62 and the resistance level of 115.45. However, in the coming week, the bulls may have the opportunity to retest the 10-year high hit earlier in the week. 120 will likely remain a critical resistance zone before the bulls can gather enough momentum to hit fresh multi-year highs.