Futures on Brent Crude (OIL) are down over 4.5% today, as markets react to the Middle East ceasefire, reducing the perceived risk of supply disruptions in the Strait of Hormuz.
- The US President Donald Trump suggested that the United States would not engage in conflict, citing that Iran’s nuclear capabilities have been significantly weakened and are now limited.
- Additionally, Israel may adopt a less aggressive stance, knowing that any strike on Iran would likely draw criticism from Trump, and that U.S. arms support would no longer be guaranteed.
- The declining U.S. dollar (USDIDX) is also contributing to profit-taking in oil markets. Brent futures have now fully erased the gains made since June 12.
OIL (H1 interval)
The weakening of the U.S. dollar continues to encourage profit-taking in oil, further reinforcing the downward move. Brent futures have now retraced the entire upward move since June 12. Current price action suggests a possible drop toward $62 per barrel, should bearish sentiment persist. Growing optimism over a diplomatic resolution between Israel and Iran is reinforcing this downside momentum.
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Source: xStation5
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