Fresh US/Iran Attacks

It’s been a choppy start to the week for oil markets and the action looks to only just be getting started. Crude futures plunged heavily lower yesterday midst reports of progress in US/Iran talks. However, reports of fresh attacks from the US on Iran overnight, as well as reports that the US has been carrying out undisclosed attacks on Iran for weeks, has seen oil prices bouncing back today. There had been plenty of speculation that Trump was preparing to launch a fresh offensive against Iran after the US midterms which take place today. However, Trump front ran that expectation with fresh missile strikes overnight. The negotiations reportedly underway between the two countries are now in doubt once again and oil prices remain vulnerable to fresh upside should fighting escalate further.

Uncertainty & Volatility

Following the attacks on Qeshm Island, the Iranian government has warned that a peace deal remains far off and said that it will not submit to US aggression. Additionally, alongside news that the IRGC had downed a US drone, it said that it was up to Washington to make the next move regarding a move towards peace. For now, the situation remains precarious and volatility risks remain high given the changeable nature of the messaging we’re hearing. Trump had signalled prior to these attacks that he expected to postpone a fresh offensive as it looked like Iran wanted to agree a peace deal. Traders now await incoming headlines for further directional cues.

Technical Views

Crude

The latest test of the 104.26 level has failed again with crude futures reversing back down to test the bull channel lows and support at the 95.06 level. While this level holds, the focus is on a fresh push higher. If we break below, however, focus turns to 87.55 as the next support to watch.