Oil prices are continuing to fall today as traders monitor developments in the Middle East. The latest reports show that Iran and Oman are progressing with negotiations aimed at establishing a ‘temporary joint maritime corridor’ through the Strait of Hormuz. These discussions are part of the broader technical talks taking place between the two countries, aimed at establishing a permanent corridor in the Strait. Meanwhile, Pakistan’s army chief has travelled to Iran, said to be supporting diplomatic efforts there while Oman too is continuing mediation.

US/Iran Hostilities Fade…For Now

We’ve seen a de-escalation in the conflict between the US and Iran in recent days, despite the sanctions announced by Trump this week aimed at financially isolating Iran. However, with the US stopping short of applying secondary sanctions against Iran’s trading partners, the move has been interpreted as less aggressive than initially thought, with oil prices cooling accordingly. Looking ahead, the focus now is on whether peace talks will resume between the US and Iran. If we hear any news suggesting the two sides are moving closer to resuming negotiations this should further weigh on sentiment near-term. On the other hand, if tensions flare up again and we see a return to hostilities, this should lead to a fresh spike higher in oil prices.

Technical Views

Crude

Oil prices are falling lower back beneath the 84.60 level and are now fast approaching a test of the 77.65 level where we also have the retest of the broken bear trend line. This is a key support level which, if held, should keep focus on a further push higher. If broken however, focus turns to support at the 70.76 level.

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Tagged in: #crude #xtiusd #iran #trump

Written by James Harte

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.