Noor Trends News, Technical Analysis, Educational Tools and Recommendations
The spillover from the Middle East crisis has disrupted crude oil markets, causing cargo ships to be diverted from the Red Sea for the foreseeable future. On Friday, there was a small increase in West Texas Intermediate (WTI) US Crude Oil, which hit 74.27, but a decline in American crude, which hit $73.725.
Cargo ships are being rerouted by logistics and shipping corporations to avoid the Houthi rebel-infested waters off the coast of Yemen, which is connected to the Suez Canal. While Iran-backed Houthi rebels continue to attack civilian ships travelling through the area, a coalition of US-led naval warships is fighting to defend Yemen’s coastline.
The ongoing Israel-Hamas conflict rages on, threatening to spill over into neighboring countries. While Israel and Palestine are not key players in Crude Oil markets, several nations surrounding the Gaza region are viewed as critical participants.
Iran is withholding further crude shipments to China, reportedly to seek higher prices for their crude oil exports. This move comes after China front-loaded a significant portion of their anticipated Crude Oil demand for the year after enjoying a $10 billion discount on crude oil imports through the first three quarters of 2023 by specifically importing from sanction-plagued Iran.
Iran is closing the discount gap that China sees on Iranian Crude Oil imports, leaving Chinese refiners in a tough spot where they have to choose between paying full price on the global market or accepting a reduced discount margin on Iranian barrels.
US Crude Oil has climbed over 6% from the weekly low near $69.41, but topside momentum remains limited as clunky markets continue to grapple with the charts. WTI has snared beneath the 200-day SMA at the $78.00 handle, capped by technical resistance from a bearish crossover of the 50-day and 200-day SMAs.
