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OIL: Oil Bounces Following Increased US Pressure On Iran

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Oil prices trended lower over most of Tuesday on global growth concerns from a trade war but then jumped following US President Trump signing a directive to increase pressure on Iran, which is likely to mean tighter enforcement of sanctions on its oil exports. The USD fell 0.7%.

  • WTI fell to a low of $70.67/bbl, below the 50-day EMA at $72.30, before the statement on Iran. It then bounced to $73.35 on the news. The benchmark was still down 0.6% on the day at $72.75. It has started today’s trading slightly lower at $72.65 following data showing a large US stock build.
  • In contrast, Brent finished up 0.3% to $76.20/bbl yesterday. It fell to a low of $74.15, below the 50-day EMA at $75.49, before jumping to $76.66. A clear break below the 50-day EMA, would signal scope for a greater sell off. Initial resistance is at $78.80 and the bull trigger at $81.20.
  • Lenient enforcement of existing sanctions on Iran has allowed it to increase crude exports by around 1mbd over the last four years, according to Bloomberg. Stricter enforcement could reduce Iran’s oil exports by around two-thirds.
  • Bloomberg reported that US crude inventories rose 5.025mn barrels last week, according to people familiar with the API data. There has been a sharp increase in flows from Canada to the US to beat the imposition of tariffs. In terms of products, gasoline rose 5.426mn while distillate fell 7mn. The official EIA data are out later today.
  • 10% tariffs on US imports from China came into effect on Tuesday and China retaliated including 10-15% tariffs on oil, coal, LNG and agricultural machinery imports from the US. The US averaged exports of 250kbd of crude to China in 2024, according to Bloomberg. China’s oil demand continues to worry the market.
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Oil prices trended lower over most of Tuesday on global growth concerns from a trade war but then jumped following US President Trump signing a directive to increase pressure on Iran, which is likely to mean tighter enforcement of sanctions on its oil exports. The USD fell 0.7%.

  • WTI fell to a low of $70.67/bbl, below the 50-day EMA at $72.30, before the statement on Iran. It then bounced to $73.35 on the news. The benchmark was still down 0.6% on the day at $72.75. It has started today’s trading slightly lower at $72.65 following data showing a large US stock build.
  • In contrast, Brent finished up 0.3% to $76.20/bbl yesterday. It fell to a low of $74.15, below the 50-day EMA at $75.49, before jumping to $76.66. A clear break below the 50-day EMA, would signal scope for a greater sell off. Initial resistance is at $78.80 and the bull trigger at $81.20.
  • Lenient enforcement of existing sanctions on Iran has allowed it to increase crude exports by around 1mbd over the last four years, according to Bloomberg. Stricter enforcement could reduce Iran’s oil exports by around two-thirds.
  • Bloomberg reported that US crude inventories rose 5.025mn barrels last week, according to people familiar with the API data. There has been a sharp increase in flows from Canada to the US to beat the imposition of tariffs. In terms of products, gasoline rose 5.426mn while distillate fell 7mn. The official EIA data are out later today.
  • 10% tariffs on US imports from China came into effect on Tuesday and China retaliated including 10-15% tariffs on oil, coal, LNG and agricultural machinery imports from the US. The US averaged exports of 250kbd of crude to China in 2024, according to Bloomberg. China’s oil demand continues to worry the market.