Brent crude dropped below $100 a barrel on Tuesday, its lowest level in two weeks, after reports that Iran offered to reopen the Strait of Hormuz within seven days if the United States eases military pressure. Saudi Arabia is also working to resume flows on a pipeline disrupted by drone attacks this month, adding to hopes of a pickup in Middle East supply.
Brent crude fell as low as $97.43 a barrel on Tuesday, its lowest level in two weeks. The drop followed a report on the Kyodo news service that Tehran proposed reopening the Strait of Hormuz within seven days if Washington takes initial steps toward easing military pressure.
Iran signals openness to a deal
According to Kyodo News, a senior Iranian government official said: "There is a possibility of moving toward an agreement." The same official added that Washington must demonstrate serious commitment for diplomacy to advance.
Traders also noted that Saudi Arabia is trying to resume flows on a pipeline disrupted by drone attacks earlier this month, reinforcing expectations of more supply reaching the market. Donald Trump told the UN General Assembly that he believes Iran will make a deal after November's midterm elections. Brent remains well above its pre-war level of around $72 a barrel.
Technicals point to further downside
Brent has fallen for a fifth consecutive session, extending its retreat from a $110 resistance zone and shedding more than $10 over the past couple of days. The pullback cracked the Fibonacci support at $97.67, a 38.2% retracement of the $78.10-$109.77 upleg, after an earlier break below the 10-day moving average at $104.24.
A clear break below $100 is needed to confirm the fresh bearish signal, according to ActionForex, with resistance now placed at $102.30, $104.24, $104.88 and $106.00, and support at $97.67, $95.02, $93.94 and $91.45. Traders watching these resistance level and support level markers remain cautiously optimistic, but analysts note that maximal demands from both Washington and Tehran could still block a diplomatic breakthrough.
Sources: Business | The Guardian, ActionForex
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