President Donald Trump announced on Truth Social that the US will not attack Iran before the congressional elections scheduled for 3 November. The reason is said to be “productive talks” with Tehran. At the same time, Trump stressed that the blockade on Iran remains fully in place, and that record quantities of oil are passing through the Strait of Hormuz (according to him, 22 million barrels in a single night), none of which is going to or from Iran. He also gave a firm assurance that Iran will not acquire nuclear weapons.
Trump’s official statement. Source: Truth Social
The market reacted immediately by unwinding the geopolitical risk premium. Brent fell below $104 per barrel, whilst WTI gave up its earlier gains, losing around 1.73% on the 30-minute chart (on a daily basis, gains still stand at 2.5%) and dropping to around $91. The 30-minute chart shows a sharp rejection from around $93 following a sharp surge in the preceding hours, which clearly illustrates how quickly investors are pricing in the easing of tensions in the Middle East. The RSI has cooled from oversold levels to around 44. The EUR/USD pair, however, is not reacting excessively to these developments.
Source: xStation
The indication that the situation will not escalate, at least until November, alleviates some of the supply risks that have been driving up oil prices until now. However, two key uncertainties remain: the sustainability of the talks themselves and the continuation of the blockade, which continues to inherently restrict the flow of key commodities. This means that, despite today’s fall, the issue of Iran will remain on the market’s radar for some time to come.
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