Oil Jumps Off Lows

Crude oil priced are on watch today following fresh US military action against Iran overnight. The US attacked more than 80 sites across Iran in response to a recent string of Iranian attacks on commercial vessels in the Strait of Hormuz. Along with the strikes, the US has also reimposed sanctions on Iranian oil exports with traders nervous that the moves could lead to a full breakdown in peace talks. The two sides have been locked in negotiations since the June 17th interim deal was signed. However, there have been a series of tit-for-tat attacks since that date though the strikes overnight mark a clear escalation. Iran has warned that it will react firmly, further raising uncertainty over the fragile ceasefire.

Bullish Risks

Crude futures were seen gapping higher at the open today though the move has stalled for now while traders await further headlines. With tensions elevated, risks of further attacks mean crude is vulnerable to continued upside through the back end of the week unless we see both sides announcing they are standing down from further attacks at this point. The market has fallen heavily since early June as optimism around a peace deal took hold. However, that move can be reversed just as quickly is traders sense that talks are falling apart. As such, plenty of volatility risk near-term around incoming headlines.

Technical Views

Crude

The gap higher in crude has seen price breaking back above the 70.76 level. If bulls can hold above here, focus turns to a retest of the 77.65 level next, in line with recovering momentum studies readings. To the downside, 65.38 and the bull trend line remain the key support levels to watch.