U.S. – Iran talks will remain the key catalyst for Brent oil in the near term. Iran wants to keep its nuclear and ballistic missiles programs, while the U.S. wants to get rid of them.
According to recent reports, Iran plans to focus the talks on its nuclear program and aims to avoid direct confict with the U.S. Meanwhile, the U.S. continues to boost its military assets in the region.
It remains to be seen whether bears will be ready to increase their short positions in this environment. The talks are extremely challenging, and both sides are far apart. In case the U.S. decides to use military force to deal a blow to Iran’s nuclear program, oil markets will rally, hurting short positions.
At the same time, the market lacks additional positive catalysts. Supply is stable despite geopolitical tensions. Recent reports indicate that the U.S. economy may be slowing down. China’s economy was hurt by trade wars.
Rising geopolitical premium provides support to oil prices, but growth is fragile. In case U.S. and Iran reach a deal, oil markets may suffer a strong sell-off.
The nearest resistance level for Brent oil is located in the $69.50 – $70.00 range. If Brent oil climbs above the psychologically important $70.00 level, it will move towards the next resistance at $73.50 – $74.00.
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