Societe Generale’s commodities team said Brent has fallen below its 50-day moving average for the first time since January, after forming a lower high near $113 last week. The contract is now testing interim support around $96, the low reached earlier in May. If that level fails, the bank outlined downside markers at an ascending trend line drawn since March around $91/$90, followed by $86.
The team also modelled several Strait of Hormuz reopening paths and linked them to year-end price outcomes. Under an early June reopening scenario, Brent would drift down towards about $85 per barrel by year-end, while later resolutions could drive spikes towards $150–$160. In a low-probability case where Hormuz remains shut until year-end, Brent could move above $200 per barrel.
Brent Crude Under Technical and Geopolitical Pressure
We are watching Brent crude closely as it has lost its footing, falling below the 50-day moving average for the first time since January. The price is now testing a critical support level around $96 per barrel. This technical weakness comes amid extreme geopolitical tension in the Persian Gulf.
The immediate cause is the ongoing disruption in the Strait of Hormuz, where recent naval tensions have reduced tanker traffic by over 70% this month, according to maritime tracking data. This has tightened the market significantly, with the latest EIA report confirming a sharp drawdown in global crude inventories. The CBOE Crude Oil Volatility Index (OVX) reflects this tension, having spiked to 55 from an average of 30 in April.
Trading Strategies and Scenarios Amid Market Volatility
For traders, this signals a period of high volatility rather than a clear directional trend. If Brent fails to hold the $96 support, we see a potential slide towards the ascending trendline near $90. A swift diplomatic resolution, which we see as a possibility by early June, would likely push prices steadily down toward $85 by year-end.
This downside scenario suggests positioning with put options or bear put spreads to capitalize on a relief rally in the event of a reopening. However, the risk of escalation remains incredibly high and must be managed. The market is pricing in a significant probability of a prolonged outage.
If the Strait remains restricted or closes entirely, we expect a rapid price spike toward the $150–$160 range, similar to the moves seen during previous major supply shocks. This outlook supports buying long-dated call options or bull call spreads to capture the explosive upside potential. The high implied volatility makes these options expensive, but they offer a defined-risk way to trade a major supply crisis.
A low-probability scenario where the disruption continues through the end of the year could see Brent crude surpass $200 per barrel. Given the two extreme possibilities, strategies like long straddles or strangles could be effective, profiting from a large price move in either direction. The key is to monitor diplomatic channels and maritime reports, as they will be the primary catalysts for the market’s next significant move.
