Crude Selling Stalls Ahead of US/Iran Deal Signing
Vance Cancels Switzerland Trip
Oil prices are holding steady ahead of the weekend with the sell-off in crude futures stalling for now amidst news that US VP JD Vance won’t be travelling to Switzerland to oversee the signing of the deal between the US and Iran. Furthermore, planned talks between the two countries, due to take place today, have also been cancelled.
Caution Returning
Oil prices had been heavily sold over the first half of the week in response to news that the US and Iran had agreed a deal, due to be signed in Switzerland today. However, as the week went on it became clear that the deal in question is not a full peace treaty but an interim deal, marking the start of a 60-day negotiations window aimed at delivering a peace deal. This clarification has seen selling in oil pause for now as traders wait to see what details emerge from the signing today.
Strait of Hormuz
The US govt has confirmed that it has now removed restrictions on traffic through Iranian ports and coastal waters, ending its naval blockade on the Strait of Hormuz with Iran too lifting restrictions. While some ships are passing through the strait, broader travel through the shipping lane is not expected to return until all Iranian-laid mines (reported to be around 80) have been cleared.
Near-Term Risks
For now, it seems that the market has shifted back into a more cautious stance, though oil prices remain heavily lower on the week and should continue lower if headlines around the signing remain encouraging. However, news that Israel and Hezbollah are fighting again today in Lebanon is concerning and could cause issues for the peace process if Iran takes issue with the fresh violence, having previously said that a ceasefire in Lebanon was a condition for peace talks.
Technical Views
Crude
The sell off in crude has stalled for now ahead of the 70.76-level support. While below 77.65, focus is on a continuation lower in line with bearish momentum studies with 65.38 the deeper bear target to note.
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