Crude oil price will be in the spotlight on Monday as traders react on the new developments in the US-Iran war. Brent, the global benchmark, has dropped to $97.6, down modestly from this month’s high of $109.96. West Texas Intermediate (WTI) ended the week at $92 as traders reacted to signs of a potential deal between the two sides.
Crude oil price in focus as Trump rejects Iran offer
Brent and WTI dropped last week as investors focused on the United Nations General Assembly (UNGA) in New York. There, President Donald Trump threatened to annihilate Iran unless it signed an agreement. He said:
“Will a deal be made with Iran that lets them rebuild and create a far greater country than it ever was before — maybe one of the greatest in the Middle East or even the world?”
At the same time, there was optimism that the US and Iran would reach a deal, with CBS reporting that talks had entered a technical phase. Iran then submitted its 7 demands to the US, including reopening the Strait of Hormuz, ending of the blockade, releasing its frozen funds, stop military attacks, and stopping interference in Iran’s internal affairs.
In a statement over the weekend, Trump said that he rejected the deal, saying that he will resume bombing unless it signs a deal. He also believes that the US is winning since Iran is not able to export its oil, while Gulf allies are doing it.
Therefore, the most likely scenario is that Iran intensifies its attacks against ships trying to cross the Strait. Also, the IRGC will seek to boost oil prices towards the November election, possibly by launching attacks against key US interests in the region. Such a move would be an October Surprise aimed at helping Democrats win by a large margin.
READ MORE: Here’s why WTI crude oil price are set to surge further despite US-Iran talks
All these events are happening at a time when gasoline and diesel prices are soaring in the United States. The average gasoline price has jumped to $4.56, while the average diesel is trading at $6.50.
The Trump administration is considering some major actions to lower diesel prices. It is considering banning exports, something that experts believe will boost prices over time. Also, Trump is considering suspending the federal tax, which would save about $0.24 a gallon.
Brent crude oil price technical analysis
Brent crude chart | Source: TradingView
The daily chart shows that Brent crude has slumped in the past few days. It fell from a high of $109.96 earlier this month to the current $97.61, its lowest level since September 8.
Brent has dropped below the important support level of $101.75, its highest point on July 23rd. On the positive side, it has remained above the 100-day Exponential Moving Average (EMA), a sign that bulls are in control.
Therefore, the most likely scenario is where it rebounds, potentially to this month’s high of $109.96. A move above that level will point to more gains, potentially to the year-to-date high of $119.
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