Crude oil under pressure from US-Iran talks and SPR barrels

FUNDAMENTAL OVERVIEW

Crude oil prices faced renewed downward pressure following further talks between the US and Iran, which helped ease tensions. The two sides continue discussions to modify Tehran's latest proposal, which aims to reopen the Strait of Hormuz in seven days provided certain conditions are met. According to reports, the sticking point is no longer the plan's elements but the order in which its steps are taken.

Iran's government spokesperson stated that Foreign Minister Araghchi gave the cabinet "a US proposal" during the day. No specifics were provided. Traders will monitor news developments closely.

Among the direct triggers for the move, the US made available as many as 40 million barrels from the strategic oil reserve (SPR) a day earlier, causing a swift decline in prices. The market also moved lower on the back of a report indicating Donald Trump's support for relaxing sanctions on Russia in return for the release of political prisoners.

The development was significant for the oil sector since any relaxation of Russia-related restrictions could lead to additional Russian oil entering global markets, thereby bolstering overall supply.

Looking forward, an agreement in the US-Iran talks would drive prices sharply down, whereas an extended deadlock or a return to heightened tensions will maintain support under the market and push it toward fresh peaks.

CRUDE OIL TECHNICAL ANALYSIS – DAILY TIMEFRAME

Crude oil (CFD contract) is heading toward the lower boundary of its channel, around 87.00. A move to this level is where buyers can be expected to step in, placing risk below it in anticipation of a recovery toward the 110.00 resistance. Sellers, conversely, will look for a breakdown below this point to scale up bearish positions toward the 80.00 mark.

CRUDE OIL TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

On the four-hour time frame, a slight downward trendline outlines the current bearish phase. In the event of a pullback, sellers can be expected to use the trendline as a reference, putting risk above it to keep pushing into fresh lows. Buyers, on the other hand, will look for a break higher to extend the pullback into the 96.00 area.

CRUDE OIL TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

On the hourly chart, a strong resistance zone exists around 91.50, reinforced by a trendline. This zone is where sellers can be expected to step in to target new lows, while buyers will look for a break higher to extend the pullback toward 96.00.

UPCOMING CATALYSTS

The US ADP and US PCE price index are due today. The US ISM Manufacturing PMI and US jobless claims figures are scheduled for tomorrow. The week ends on Friday with the US NFP report. The focus will remain on US-Iran relations despite the data.