Talks with Iran were suspended after parties failed to reach an agreement. Russia refused to agree on a deal unless it received guarantees that it will be able to trade with Iranian entities regardless of Western sanctions. While this should put upward pressure on oil prices, both Brent and WTI trade lower today. This is because an optimistic narrative coming from Russia-Ukraine talks is prevailing. Ukraine said that talks become constructive, Russia began to listen to proposals and initial agreement, including a tentative ceasefire agreement, could be reached within days. Another round of talks began today at 8:30 am GMT.
Taking a look at Brent chart at H1 interval (OIL), we can see that price has been trading in a descending triangle pattern recently limited by a downward trendline and a support zone ranging near 61.8% retracement of recent major upward impulse ($109 per barrel). A lower limit of the pattern is being tested at press time. A break below could trigger a deeper downward move. Textbook range of downside breakout from this range points to a drop to as low as $97.50 per barrel. Nevertheless, a lot will depend not on technical setup but on geopolitics with breakdown in Russia-Ukraine talks creating risk of price spike while reaching an agreement could exert downward pressure on prices.
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Source: xStation5
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