Could Oil surge past $80 or is $120 the real target?

Just when the markets exhaled, the Middle East lit a match.

A surprise Israeli strike on Iranian military sites jolted the global energy complex, sending Brent crude surging past $77 and WTI following close behind. Stocks faltered, gold caught a bid, and traders did what they do best in times of uncertainty - scrambled. 

Now, the whispers are growing louder: Is $80 oil a foregone conclusion? Or are we staring down the barrel of something bigger - $120 oil and a fresh inflation inferno?

Flashpoint to fuel pump: The anatomy of an Oil surge

Right now, $80 oil isn’t some wild call - it’s practically within touching distance. With WTI flirting with $72 and Brent around $73, we’re just one headline away from liftoff.

The recipe is classic: tighter-than-expected U.S. crude inventories, a seasonal surge in summer fuel demand, and geopolitical jitters that just won’t quit. Add in fragile optimism over US-China trade thawing and you’ve got a bullish setup with teeth.

Source: LSEG Data and Analytics, The New York Times

Markets don’t move on logic - they move on fear and hope. Right now, both are pointing in the same direction.

J.P. Morgan’s $120 warning

Here’s where the story turns from bullish to boiling. According to J.P. Morgan, a serious escalation involving Iran could catapult oil to $120 per barrel. That would torch any disinflationary dreams the Fed was nursing and throw rate-cut narratives into the shredder.

“Oil at $120 would put rate hikes back on the table,” warns J.P. Morgan.

Translation? Your commute gets pricier, your groceries cost more, and central banks—already tightrope walking between recession and recovery - get pushed into policy panic mode.

And politically, it’s a landmine. Former President Trump has tethered his anti-inflation pitch to the promise of cheap energy. A 50% spike in crude? That message implodes.

Risk-off rotation: Markets react to missile headlines

Traders didn’t wait for the weekend to hedge. U.S. futures sank over 1% on the missile news, while gold and the Swiss franc soared - classic safe-haven plays. Energy and defence stocks caught a bid. Wall Street rotated out of tech and into trenches.

Source: FactSet

Iran has promised a response. Oil traders are staying long through the weekend. 

Beyond the noise: Are we entering an Oil supercycle?

Forget demand surges from China or EV delays. This time, the supercycle thesis isn’t about consumption - it’s about conflict.

For months, markets brushed off the idea that geopolitical instability could trigger a structural oil rally. But with missiles flying, inventories thinning, and futures jumping, that narrative is back in play.

What if this isn’t just a price spike, but a regime change?

Technical analysis: Will $80 be a pit stop on the way to $120?

The answer depends on two fronts: diplomacy and retaliation. If things escalate further, $80 could be just the beginning. But if the weekend brings a pause in hostilities, traders might take some heat off the market - for now.

Still, with inflation high, central banks twitchy, and oil at the mercy of missiles and politics, the price action is anything but stable.

Source: Deriv MT5

The information contained within this article is for educational purposes only and is not intended as financial or investment advice. The performance figures quoted refer to the past, and past performance is not a guarantee of future performance or a reliable guide to future performance. The information may become outdated. Do your own research before making any trading decisions.