Fresh US/Iran Attacks

Crude oil prices have gapped higher at the start of the week as rising tensions in the Middle East fuel uncertainty once again. The US has resumed aerial attacks on Iran as the standoff between the two continues this week. The US began a new wave of attacks against Iran last night with US Central Command (Centcom) declaring on X that the assault is aimed at “degrading their ability to attack civilian mariners and commercial ships freely transiting the Strait of Hormuz.” Iran once again retaliated by attacking US military sites and US interested in neighbouring countries such as Jordan and Kuwait and, most notably, Qatar.

Bullish Crude Risks

With the two countries fighting for control of the Strait of Hormuz, fresh violence in the region is hampering distribution expectations with tankers likely to refrain form attempting to pass through. Additionally, fears over a full collapse of the ceasefire and a return to all-out war hold big upside risks for oil prices. For now, the fact that technical talks are continuing is offering some reassurance that the attacks are merely posturing and noise. However, with the latest round of talks failing to deliver and progress time is running out to deliver a deal. For now, risks appear skewed to the upside with crude likely to push higher in response to news of any further attacks from either side.

Technical Views

Crude

For now, the market is consolidating above the 70.76 level with focus on a fresh test of the 77.65 level next, in line with bullish momentum studies readings. If we do push above that marker, 84.60 is the major level to watch. To the downside, 65.38 will be the key support to note with the bull trend line from last year’s lows coming in just below.