Oil prices surged yesterday ending the day with a 5.4% gain on heightened geopolitical risk from the Middle East. A decision by the US to lighten embassy staff in Iraq and move personnel in the Middle East ahead of Nuclear talks with Iran raised eyebrows.
US President Trump's comments over the last 6 hours did not help matters with the President stating: “the U.S. was moving personnel because the Middle East "could be a dangerous place". He also said the U.S. would not allow Iran to have a nuclear weapon.
Iran has said its nuclear activity is peaceful and has threatened retaliation if attacked.
Today however, has seen Oil prices slide in European trade, down as much as 2.2% at the time of writing, trading at 66.75 a barrel.
A potential escalation with Iran could have massive implications for Oil markets. The biggest concern being a supply disruption as around 20% of the world's Oil passes through the Straight of Hormuz.
The narrow chokepoint could become a key area of focus in the event of regional tensions with Britain's maritime agency warning that rising tensions in the area could lead to more military activity, which might affect shipping in key waterways.
It advised vessels to use caution while travelling through the Gulf, the Gulf of Oman and the Straits of Hormuz, which all border Iran.
US PPI Data Could Affect Oil Prices
With Market participants still concerned about growth and the potential for inflation to rise due to tariffs, US PPI data could have a knock on effect on markets sentiment and thus Oil prices.
If PPI data comes in higher than expected markets may see this as a sign that a rise in CPI may be on its way. This in turn could affect global demand as consumers prioritize critical spending.
This of course is a possibility but Geopolitical risk is likely to remain front and center.
Technical Analysis - WTI Oil
From a technical analysis standpoint, Oil broke a significant descending trendline which had been in play since January 2025.
However the move only occurred on the back of US-Iran tensions. Prior to that, Tuesday's daily candle close echoed a false breakout and highlighted the current concern from bulls.
The concern for bulls still remains focused on tariffs and trade deals and how that may impact growth for the rest of the year. This will keep sellers interested and thus could hamper any rally higher.
The rise in US-Iran tensions however could be the catalyst needed for price to head higher but then again sustainability of the move may become a hot topic of discussion. The pullback in price this morning has provided a brief glimpse that sustainable higher prices for Oil may prove to be elusive right now.
Oil rejected after testing the 200-day MA resting at 68.55 and now looks set to test support at the 100-day MA around the 66.00 a barrel mark.
Will this handle hold and lead to the next bullish leg or will a deeper retracement to the trendline take place? That may be the focus for day traders as the US session unfolds.
WTI Oil Daily Chart, June 12, 2025
Source: TradingView (click to enlarge)
Source: TradingView (click to enlarge)
Follow Zain on Twitter/X for Additional Market News and Insights@zvawda
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Oil prices surged yesterday ending the day with a 5.4% gain on heightened geopolitical risk from the Middle East. A decision by the US to lighten embassy staff in Iraq and move personnel in the Middle East ahead of Nuclear talks with Iran raised eyebrows.
US President Trump's comments over the last 6 hours did not help matters with the President stating: “the U.S. was moving personnel because the Middle East "could be a dangerous place". He also said the U.S. would not allow Iran to have a nuclear weapon.
Iran has said its nuclear activity is peaceful and has threatened retaliation if attacked.
Today however, has seen Oil prices slide in European trade, down as much as 2.2% at the time of writing, trading at 66.75 a barrel.
For more on US-Iran, read Markets Today: UK Economy Contracts for First Time in Six-Months, US-Iran Tension Stokes Haven Demand, DAX Slides
Straight of Hormuz Raises Supply Concerns
A potential escalation with Iran could have massive implications for Oil markets. The biggest concern being a supply disruption as around 20% of the world's Oil passes through the Straight of Hormuz.
The narrow chokepoint could become a key area of focus in the event of regional tensions with Britain's maritime agency warning that rising tensions in the area could lead to more military activity, which might affect shipping in key waterways.
It advised vessels to use caution while travelling through the Gulf, the Gulf of Oman and the Straits of Hormuz, which all border Iran.
US PPI Data Could Affect Oil Prices
With Market participants still concerned about growth and the potential for inflation to rise due to tariffs, US PPI data could have a knock on effect on markets sentiment and thus Oil prices.
If PPI data comes in higher than expected markets may see this as a sign that a rise in CPI may be on its way. This in turn could affect global demand as consumers prioritize critical spending.
This of course is a possibility but Geopolitical risk is likely to remain front and center.
Technical Analysis - WTI Oil
From a technical analysis standpoint, Oil broke a significant descending trendline which had been in play since January 2025.
However the move only occurred on the back of US-Iran tensions. Prior to that, Tuesday's daily candle close echoed a false breakout and highlighted the current concern from bulls.
The concern for bulls still remains focused on tariffs and trade deals and how that may impact growth for the rest of the year. This will keep sellers interested and thus could hamper any rally higher.
The rise in US-Iran tensions however could be the catalyst needed for price to head higher but then again sustainability of the move may become a hot topic of discussion. The pullback in price this morning has provided a brief glimpse that sustainable higher prices for Oil may prove to be elusive right now.
Oil rejected after testing the 200-day MA resting at 68.55 and now looks set to test support at the 100-day MA around the 66.00 a barrel mark.
Will this handle hold and lead to the next bullish leg or will a deeper retracement to the trendline take place? That may be the focus for day traders as the US session unfolds.
WTI Oil Daily Chart, June 12, 2025
Source: TradingView (click to enlarge)
Follow Zain on Twitter/X for Additional Market News and Insights @zvawda
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