Crude Reacts to News of US/Iran Attacks
US/Iran Tensions Flare Up
Oil prices are softening again today after gapping higher at the open as traders nervously receive reports that the US and Iran exchanged fire in the Strait of Hormuz. Trump has insisted that the ceasefire is still intact despite the clashes but the reaction in oil suggests that traders are very much wary of the risk that the war is reignited and the peace process abandoned. Earlier this week, trump signalled that he still thinks the war will be over in coming weeks while the Iranian Foreign Minister cited good progress in peace talks. However, with the Strait still closed and fresh skirmishes between US and Iran, there is a high level of scepticism that puts oil prices at risk of a fresh push higher. If any further fighting is seen over the weekend or if peace prospects are seen growing dimmer, oil prices could well start next week on a much stronger footing.
Weekend Gap Risks
For now, the initial push higher has been contained with traders likely expressing some relief that Trump spoke out in support of the ceasefire and that the attacks appeared short lived. Both sides claimed the other initiated the attacks while Trump separately warned that Iran will be hit much harder if a deal is not agreed soon. As such, volatility risks remain elevated near-term and gap risk over the weekend looks high.
Technical Views
Crude
For now, crude prices remain caught within the middle of the broad triangle pattern which has framed the consolidation over the last three months. 95.06 is holding as support here with 101.69 the local resistance for bulls to overcome and turn focus back to the triangle highs and the 114.44 level. To the downside, 84.60 and the triangle lows will be the key support to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.