Oil prices are showing their sensitivity to the escalation of foreign affairs between the U.S. and Iran following the recent attack on oil tankers hit by torpedos in the Gulf of Oman or which the US has just called at Iran as the assailant.
The UN warned just last night of the dangers of “a major confrontation” in the Persian Gulf following the attack where two oil tankers were seriously damaged. this was in the same site where Iran allegedly sabotaged four oil ships last month. The US was quick to call this out as the most serious incident since the White House warned in early May that Iran was plotting attacks in the region.
In recent trade, speaking to the media US Secretary of state Pompeo said that Iran is working to disrupt the flow of oil through the strait of Hormuz and has publically blamed Iran for the attack on the oil tanker. Subsequently, WTI prices rallied between $52.16/91 in a round trip and to move sideways again around 52.30 at the time of writing. However, not that exploding tankers in the Persian Gulf is not a cause for concern, and of course, so too are the risks of the ramifications of any escalation in tensions between the U.S., Iran and in the international community, demand for crude oil is weak and getting weaker which have been weighing on the price of oil and is offsetting the sentiment of an imminent war between the US and Iran which would always boost the price of oil.
The price broke below the 200 weekly EMA at 52.50 but fell shy the 14th Jan 50.41 low which guards the 26th November lows at 49.44. This is a base for WTI at the moment as a trend line set on the 5th June. On a break to the downside, however, we have the descending wedge patter's support around 49.70/50.00. On the flip-side, a break of 53 opens 54.50 and 56 meeting the 20-D EMA.
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