Ceasefire Announced

Crude prices have plunged heavily lower today on the back of the eleventh-hour ceasefire deal agreed between the US and Iran overnight. Following a rejection of Trump’s peace proposal and pre-emptive strikes from Iran on sites across the Middle East, the two sides eventually announced a ceasefire deal just ahead of Trump’s deadline, avoiding the severe escalation in the war that Trump had threatened if a deal was not done. US attacks on Iran will now be paused for two weeks to allow for continued negotiations, during which time the Strait of Hormuz will be fully reopened to all commercial vessels.

Crude Plunges

Crude futures cratered lower by more than 20% in response to the news with further downside likely if the ceasefire holds and negotiations look to be progressing. The prospect of a fresh escalation in the conflict, and the negative impact on supply, had seen crude prices rising back up as high as $118 p/b yesterday, now trading back down below the $100 mark. Some consolidation is likely near-term while traders await incoming news on negotiations. If talks break down and/or Trump resumes his threats against Iran, crude prices could quickly push higher again. As such, volatility risks remain elevated near-term while negotiations get underway in the next two weeks.

Technical Views

Crude

The sell off in crude has seen the market breaking back below the $100 mark. Price tested below the 95.06 support level and rising trend line from YTD lows, but has since bounced back above. While atop this level, focus is on a continuation higher. Back below there, however, focus turns to 84.60 next.