Oil Prices Soar on Middle East Conflict, But Diplomacy May Bring Crash

A surge in oil prices has been driven by escalating US-Iran conflict and the opening of a new front in the Middle East, but a diplomatic breakthrough may soon reverse the trend. The Yemeni Houthi militants have launched missile attacks on Saudi Arabia's southern city of Jizan, blocking shipping through the Strait of Hormuz and putting oil supplies at risk.

Brent crude oil prices rose by 27% over two weeks to $96.78 per barrel before plummeting 5% in a single day due to reports of US-Iran negotiations. A quantitative model called the 'TACO Index' predicts that when market pressure reaches an extreme, there is a high probability of Trump de-escalating policies.

The 'TACO moment' may occur as early as July 26, with analysts predicting a deep pullback in oil prices once the US military backs down or enters negotiations. Technical analysis indicates strong short-term bullish momentum and a V-shaped reversal pattern, but there is also room for a false breakout and swift sell-offs.