Beat the dog before the lion. This saying could be well applied to what Joe Biden is doing now. The US president warned national oil companies that he would seek to impose higher taxes on oil companies that post "windfall" profits without investing in their production. This initiative is expected to urge the companies to use their profits for boosting oil production and, as a result, for lowering fuel prices. US citizens are shocked by extremely high inflation while aggressive monetary tightening by the Fed is pushing the country into a recession. So, the US administration is desperately looking for ways to tame soaring prices, including fuel costs, although this could be a challenging endeavor.

Earlier, the US called on OPEC+ to pump more oil as high crude prices contribute to a recession. Meanwhile, US energy companies were using their profit to pay out dividends instead of reinvesting it in production and refining. Biden accused them of "war profiteering" and was determined to stop this. Brent crude gained considerably since May as OPEC+ had cut oil output by 2 million barrels per day. So, measures needed to be taken to limit this price increase.

Oil monthly change

Obviously, the US president has some political motives behind his statement. He clearly understands that the Fed's attempt to fight inflation is pushing the economy into a recession which casts a shadow over the ruling Democratic party. At the same time, fears over a global economic downturn are the main reason why oil lost a quarter of its value since this summer. If the Fed and other central banks slow down the pace of monetary tightening, the global recession could be avoided which is a positive factor for Brent.

Notably, OPEC has raised its projection for global oil demand over the next few years up to 2025. The cartel expects global demand to be at 105.5 million barrels per day, up by 2 million barrels from the previous forecast. Probably, the alliance hopes to see a quick recession or no recession at all.

OPEC global oil demand forecast

As far as I see it, if the Fed manages to have a soft landing which means raising interest rates without hurting the economy, oil will react with a rise. Besides, investors will focus more on the embargo on Russian oil as December is coming. Moscow has not yet fully prepared for diverting its supply flows to other countries which serves as a bullish factor for Brent.

In fact, global oil demand may turn out to be better than expected, thus supporting the positive outlook for Brent crude benchmark. The decline in oil supplies from Russia will also boost oil prices.

From the technical viewpoint, the emergence of such patterns as Three Indians and the Splash and Shelf hints at an upcoming reversal of the downtrend. A breakout of the resistance area at $95 will be a good moment to go long on the asset. The levels of $95.8, $97.2, and $98.9 will act as initial targets.