The Conflict Between Israel and Iran Continued for its Fifth Day

Recap: The oil market on Tuesday posted yet another inside trading day but ended higher as the conflict between Israel and Iran continued for its fifth day. The market, which gave up some of its previous gains on Monday on news that Iran was seeking an end to hostilities and was open to resume nuclear talks, was well supported as Israel’s strikes against Iran continued and U.S. President Donald Trump urged everyone to immediately evacuate Tehran. The market was further supported on speculation that the U.S. may join the Israeli attack on Iran, with President Trump stating that “We now have complete and total control of the skies over Iran” and that the U.S. knew exactly where Iran’s Supreme Leader was “hiding”. The market posted a low of $71.00 on the opening before it bounced off that level and retraced its previous losses. The crude market gradually traded higher throughout the session, posting a high of $75.25 ahead of the close. The July WTI contract settled up $3.07 at $74.84 and continued to trade higher in the post settlement period and posted a new high of $75.38. The August Brent contract settled up $3.22 at $76.45. The product markets ended the session sharply higher, with the heating oil market settling up 11.18 cents at $2.5051 and the RB market setting up 5.2 cents at $2.2719.

Technical Analysis: The crude market will remain in its sideways trading range as the market remains supported by the Middle East conflict. While the worst-case scenarios, such as a disruption through the Strait of Hormuz, have not yet been realized, Iran’s oil exports from Kharg Island appear to have been halted in recent days and refineries in both countries have been impacted, which will continue to lend support to the market, especially if the conflict escalates further. The oil market is seen finding support its lows of $71.00, $69.38, $68.49, $66.72, $66.28, $64.57, $64.20 and $63.61. Meanwhile, resistance is seen at its high of $75.38, $77.49, $77.62, $78.47, $79.44, $80.00, $80.59 and $80.77.

Fundamental News: On Tuesday, Israel and the U.S. increased their pressure on Iran, prompting speculation that the U.S. could be preparing to join in the attack. U.S. President Donald Trump said that the he had not reached out to Iran for peace talks in any way, shape, or form. He said Iran “should have taken the deal that was on the table”. President Donald Trump said he wanted a “real deal” to end the nuclear problem with Iran and indicated he may send senior American officials to meet with Iran as the Israel-Iran air war continued for a fifth straight day. He made the comments during his midnight departure from Canada, where he attended the Group of Seven nations summit on Monday. President Trump predicted that Israel would not be slowing its attacks on Iran. He urged everyone to immediately evacuate Tehran. World leaders meeting at the Group of Seven summit called for a de-escalation of the conflict between the regional foes, saying Iran was a source of instability and must never have a nuclear weapon while affirming Israel’s right to defend itself. President Trump, who left the summit early due to the Middle East situation, said his departure had “nothing to do with” working on a deal between Israel and Iran after French President Emmanuel Macron said the U.S. had initiated a ceasefire proposal. Later on Tuesday, U.S. President Donald Trump stated “We now have complete and total control of the skies over Iran”, crediting U.S. military equipment for helping Israel gain air superiority. Three U.S. officials said the U.S. military is deploying more fighter aircraft to the Middle East and extending the deployment of other warplanes, increasing U.S. military forces in the region as the war between Israel and Iran continues. One of the officials said the deployments include F-16, F-22 and F-35 fighter aircraft. Two officials stressed the defensive nature of the deployment of fighter aircraft, which have been used to shoot down drones and projectiles. The USS Nimitz aircraft carrier strike group is sailing to the Middle East ahead of schedule, marking the first significant move of U.S. military assets to the region since Friday.

Early Market Call – as of 8:35 AM EDT

WTI – Jul $75.21, down 28 cents

RBOB – Jul $2.2979, up 1.69 cents

HO – Jul $2.5274, up 10 points

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