US Sanctions Iran
Oil prices are continuing to push higher on Tuesday with the crude futures market now up almost 4% on the week. The rally comes amidst increased supply disruption fears linked to risks of a US/Iran conflict as tensions continue to rise. Yesterday, President Trump announced a 25% tariff to be imposed on any countries doing business with Iran. These sanctions are seen as the first step in the US response to the situation there with risks of a military attack still elevated. Near-term, these sanctions are expected to drive higher crude prices via market tightening and could to a strain on trading relations with countries such as China who are big buyers of Iranian crude.
Further Response Risks
Near-term, risks appear skewed to the upside for crude as sanctions take effect. Additionally, US pressure on Iran is unlikely to be walked back and if state violence against protesters continues, the threat of military action will grow stronger. Against this backdrop, crude prices are expected to push higher with news of any further US sanctions/actions against Iran likely to see amplified buying.
Tanker Attacks
Crude prices are also spiking today on the back of news that two oil tankers near the Black Sea loading terminal. Bloomberg is running a story from an unnamed source, claiming the information is not widely known at the time of reporting. This once again underscores the threat to supply from rising geopolitical tensions. With risks of further news elevated near-term, crude expectations remain tilted upwards for now.
Technical Views
Crude
Bearish divergence on momentum studies into the recent lows, followed by the bullish channel break, suggest that crude could be carving out a bottom here. Price is fast approaching a test of the 61.39 level which, if broken, will turn focus to 64.42 next as the higher bull target.
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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.