Brent - Oil Posts Its Biggest Daily Jump Since 2020, and Today Brings More

Brent trades around $85.3 today, its highest level this month, after jumping 9.6% on Monday. That was the biggest single-day gain in six years. The move continued overnight as the conflict around the Strait of Hormuz entered a new phase.

Here is what changed. President Trump announced that the US will charge a fee "at the rate of 20% on all cargo shipped" through the strait, with US warships guarding the route. For a full supertanker, that is roughly $30 million per passage, compared with fees of up to $2 million that Iran used to charge. Washington also reinstated its blockade of Iranian ports, effective today. Iran responded by striking two UAE supertankers, killing one sailor, and hitting a Kuwaiti drilling platform.

Note what is driving the price. The strait is not fully closed, and some ships still pass. But traffic has dropped by more than half, insurance costs are climbing, and now a 20% fee may be added on top. Oil rises not because supply stopped, but because every barrel that moves through Hormuz is becoming more expensive and more dangerous to move.

There is one more layer today. The US releases its CPI inflation report this afternoon, and new Fed Chair Kevin Warsh testifies before Congress shortly after. Expensive oil feeds inflation, and higher inflation strengthens the case for a Fed rate hike. A hot CPI number on top of an oil spike would be an uncomfortable mix for stocks and gold.

Brent key levels:

• Resistance: 86, then 90
• Support: 83, then 80

Watching: today's US CPI report and Warsh's testimony, tanker traffic and insurance costs in the Strait of Hormuz, Iran's response to the blockade.

By Born2trade market research department

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