Crude Oil price surged on escalation of US – Iran conflict

WTI oil started trading with $6 gap higher on Monday after the conflict between Israel/US and Iran started over the weekend.

The contract price jumped to $73.35 per barrel so far, following Friday’s close at $67.30, hitting the highest since June 23.

Although markets anticipated such scenario, immediate reaction was in a way limited, in view of the seriousness of the problem and particularly on consequences, as the conflict quickly gained pace and spread across the region of the Middle East.

Also, in comparison to the crisis in 1974 (Middle East Oil embargo) reaction nowadays was milder and showing more space at the upside, with $100 per barrel zone seen as equivalent to the levels at that time.

Market participants remain alerted and focus on potential extended supply disruption on close of Hormuz strait, where one fifth of global oil supply flows, as the latest developments warn that conflict may last (President Trump said that it may last for four more weeks, after initial estimations of few days needed to finish the job).

This remains a major threat and longer supply disruption would have a domino effect on the global economy, with stronger rise in oil prices to spark fresh inflationary pressures and boost the prices across the globe.

Near-term price action moves in a consolidation range under new multi-month high and holds above psychological $70 level (also near broken Fibo 38.2% of $95.00/$54.87 descend) that keeps bias with bulls.

Below $70, next supports lay at $69.22 (today’s low), $68.41 (100DMA) and $67.81 (Friday’s top).

Session high ($73.35) marks immediate resistance, followed by $74.94 (50% retracement) and $75.60 (200DMA).

Res: 73.35; 74.94; 75.60; 77.62
Sup: 70.20; 70.00; 69.22; 68.41