The new trading month has begun with a major geopolitical shock event. Over the weekend, markets were confronted with reports of a large-scale US-Israel military operation targeting senior Iranian leadership — an escalation that, if sustained, could fundamentally reshape Middle East risk pricing.

With retaliatory missile exchanges already reported and regional airspace disruptions emerging, markets have rapidly shifted into a maximum “Risk-Off” posture. Investors are aggressively repricing crude oil for potential supply disruption, while capital rotates sharply into traditional safe havens such as Gold.

The energy market is now confronting a worst-case supply scenario.

A high-level strike targeting Iranian leadership — followed by immediate retaliation — raises direct concerns over regional energy infrastructure and the stability of the Strait of Hormuz, through which roughly 20% of global oil flows.

Market Reaction:

The geopolitical “war premium” has returned decisively. Traders who reduced exposure late last week are now scrambling to hedge against potential supply shocks. Both WTI and Brent opened the week with significant upside gaps as risk positioning was rapidly rebuilt.

This geopolitical shock has invalidated prior consolidation setups and restored strong bullish momentum to crude.

Both WTI and Brent experienced aggressive gap-ups at the Monday open, followed by a classic technical pullback after the initial surge.

For WTI:

The previous $65 support has held decisively, with price now consolidating above the $70 region. Near-term support sits around $70, with $67 acting as the structural floor. As long as tensions remain elevated, dips toward support are likely to attract buyers.

For Brent:

Price has pushed above the $72 pivot, shifting immediate support toward the $75 area, while overhead resistance sits near $82. Momentum remains headline-sensitive.

Outlook:

Unless diplomatic signals emerge quickly, crude is likely to remain structurally elevated. Short-term pullbacks may occur, but the broader tone will remain dictated by geopolitical developments rather than technical patterns.

While oil reflects supply shock fears, Gold is rallying on systemic uncertainty.

The metal is benefiting from a dual catalyst:

• Escalating geopolitical risk

• Persistent macro concerns around inflation

Gold has broken decisively above recent resistance, converting the $5,250–$5,300 zone into support. If this level holds, the next liquidity cluster sits near $5,440–$5,500.

In the current environment, intraday dips are likely to be bought quickly as investors prioritise capital preservation.

• Geopolitical Headlines

Volatility risk remains extreme. Further military escalation, infrastructure targeting, or diplomatic signalling could trigger sharp intraday swings across Oil, Gold, FX, and equities.

• US ISM Manufacturing PMI

While geopolitics dominates, weak US data could compound risk-off flows and strengthen the stagflation narrative — particularly supportive for Gold.

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