Confusion Around IS/Iran Negotiations

Oil prices are pushing higher again today amidst reports that US ground troops are on their way to the Middle East as confusion reigns around Trump’s peace proposal. Iran maintains that while it is reviewing the ceasefire proposal sent over, there is no dialogue between the two countries yet. Trump, however, maintains that Iran is already in negotiations with the US. One view is that Iran doesn’t want to surrender the leverage of high oil prices by acknowledging negotiations. The longer oil prices remain high, the greater the toll on Western economies and the more bargaining power Iran has. Until we get any further clarity on the situation, the status quo should keep oil prices supported on the view that no ceasefire is forthcoming and risks of a US ground assault on Iran are still seen.

US Crude Stores Surge

Data yesterday from the EIA showed US commercial crude stores rising to 6.9 million barrels, in stark contrast to the -1.3-million-barrel level forecasted. The slump demand shows the impact of higher fuel prices already as businesses and consumers suffer the fallout from the Iran war. Crude stores are now back at their highest levels since Q3 2024 and look poised to rise further while energy prices remain elevated. For now, risks remain skewed higher for crude as traders monitor incoming headlines around the Iran war. However, if we do get any news of a breakthrough (confirmation of negotiations) this could fuel sharp downside volatility, meaning traders should remain cautious near-term.

Technical Views

Crude

The recovery off the 84.60 level continues for now with price now testing the 95.06 level. If bulls can breach this marker, 101.69 will be the next resistance to note. To the downside, 84.60 remains the key support to watch for now with 77.65 below if broken.