Crude Bounces Back With Iran Peace Talks In Doubt
Crude Higher on Monday
Crude prices are pushing higher again at the start of the week following news that the US seized an Iranian ship in the Strait of Hormuz. Iran immediately announced that the Strait is now fully closed once again and has indicated that it will not take part in further peace talks for now. The news marks a major shift in tone from Friday when Iran announced the Strait of Hormuz was reopened, leading risk assets higher and crude and USD lower. Crude futures plunged to lows of $79.26 on Friday as traders cheered the reopening but are now trading back up in the $88s and are at risk of rallying further while tensions remain elevated.
Trump Threatens Escalation Against Iran
Trump posted news of the seizure of the Iranian ship on Truth social claiming the ship attempted to bypass the US blockade of the Strait. This comes shortly after Trump warned that if Iran doesn’t accept a peace deal the US will ‘knock out every power plant” in the country. US negotiators are due to arrive in Pakistan today for the next round of talks. However, it is unclear whether Iran will join now. If Iran doesn’t join the talks, crude prices could spike firmly higher particularly if Trump continues to threaten further military action. If Iran does join the talks, however, crude prices are vulnerable to a fresh drop lower again if any progress is made and Trump dials back his threats.
Technical Views
Crude
The sell off in crude has stalled for now on the test below the $84.60 level. Price has since bounced back above and while that floor remains, focus is on a recovery towards the $95.06 level next. If we do turn lower again, however, focus will be on the $77.65 level in line with bearish momentum studies readings.
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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.