Fresh Middle East Violence

The rally in crude has stalled for now as traders await fresh headlines around developments in the Middle East. Crude futures have rallied more than 13% this week amidst the escalating hostilities between the US and Iran. The US has intensified its attacks on Iranian targets with Trump now warning of possibly extending this to civilian targets and chatter around ground campaign options. Iran in return has stepped up its attacks against US military sites in the Middle East. With fears of a return to all-out war at fever pitch, the softening in oil prices today is likely temporary and looks linked to news that Trump has u-turned on his plans to impose a 20% tariff on Iranian ships transiting the Strait of Hormuz. For now, it seems traders are viewing this as a de-escalation of sorts and a diminished risk to distribution.

Bullish Risks

Looking ahead, however, risks appear firmly skewed to the upside for crude prices. Tensions remain elevated and at risk of spilling over in more intense fighting. Against this backdrop, crude prices should continue to push higher with only news of a cessation of violence likely to help turn them down lower again. As such, focus will remain on incoming headlines with news of any further attacks likely to send crude higher while any signs that tensions are cooling should help ease prices further.

Technical Views

Crude

The rally in crude has seen price breaking above the 77.65 level. With momentum studies bullish focus is on a continuation higher with 84.60 the next big resistance level to watch. For now, the bull outlook remains while we hold above 77.65.