On April 23, ATFX reported that instead of a renewed military conflict between the United States and Iran, markets witnessed an announcement from former President Trump indicating an "indefinite extension" of the ceasefire. Trump further stated that Iran is experiencing significant internal division and that time is being given for the situation to stabilize.
In contrast, statements from Iranian officials presented a different picture. Senior Iranian representatives emphasized that Iran never requested a ceasefire, highlighting that many citizens oppose such a pause and advocate for continuing military efforts.
The discrepancy between U.S. and Iranian statements can be interpreted in two ways. One interpretation suggests Trump made the announcement unilaterally without prior agreement from Iran. The other indicates a breakdown in communication between Iran's decision-making bodies and its public spokespersons, aligning with the notion of internal fragmentation mentioned by Trump.
For the international crude oil market, regardless of the interpretation, the conflicting statements underscore ongoing tensions. The U.S. military blockade of the Strait of Hormuz remains in effect, restricting the passage of cargo ships and oil tankers and maintaining tightness in global crude oil supply.
The chart illustrates the U.S. Strategic Petroleum Reserve levels, showing a pronounced decline over the past six years, with a notable low point in mid-2023 when reserves totaled approximately 346 million barrels. While reserves saw a recovery over the subsequent three years, a downward trend has reemerged since February this year. This shift is directly linked to the U.S.-Iran conflict, which has driven up oil prices, prompting the release of strategic reserves to stabilize supply.
A straightforward analysis suggests that as long as the U.S. strategic petroleum reserves continue to decline without a rebound, supply constraints in the international crude market will persist, making it difficult for oil prices to fall below key support levels.
Most countries have released their March CPI annual rates, with the U.S. figure surging from 2.4% to 3.3% and the Eurozone's from 1.9% to 2.6%. These increases indicate that international oil prices are significantly impacting daily consumer expenses. If the stalemate between the U.S. and Iran prolongs, preventing oil prices from dropping below the symbolic $90 per barrel mark, inflation rates in the U.S. and Europe could spiral out of control again.
With the mid-term elections approaching in November, Trump faces potential political repercussions, as high inflation and prolonged military engagement could adversely affect Republican support rates. Given these serious consequences, it is unlikely that Trump will allow military actions against Iran to evolve into a protracted conflict.
On the technical chart, the latest intermediate-term high resistance for international oil prices is at $106.6, while the intermediate-term low support is at $75.93. Although $78.86 might appear as a potential new low, it requires confirmation from a right-sided bullish reversal pattern to be validated. Considering the strong resistance at $106.6 above, the space for forming such a pattern is significantly constrained, increasing the probability that the $78.86 level will be breached downward, negating its status as an intermediate-term low.
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