OIL: Crude Up Over 4% As Iran-Israel Strikes Continue But Still Below Resistance

Oil prices jumped on news of explosions in Iran and are up again following reports of further Iran-Israel missiles. WTI is up 4.3% to $94.42/bbl, close to the intraday high at $94.80 reached earlier, and Brent is 4.3% higher at $97.10/bbl after a peak of $97.32. Given the escalation of Middle East hostilities in less than 24 hours and the ever-growing risk to what the US and Iran have agreed and the negotiations themselves, oil’s response has been fairly restrained and benchmarks remain below initial resistance levels.

• Israel struck military targets across Iran in retaliation for Iran targeting Israel earlier and following reports of more Iranian missiles heading towards Israel, an Iranian Petrochem plant was reportedly struck.
• There were also reports that Saudi Arabia triggered its missile alert amid reports of the Saudi Prince Sultan base being targeted. Iran denied it was them.
• Iran said after its first attack that it was the “beginning of a full week of continuous strikes” and recent reports confirm this. Despite the apparent unravelling of the prospects for free shipping through Hormuz, President Trump told the FT that he thinks the US-Iran deal is “still on”.
• US Central Command reported 1000 commercial vessels had passed through the Strait of Hormuz since the ceasefire in early April, above Bloomberg’s estimate of 650 using its ship tracking data, which is likely due to vessels increasingly turning off transponders to go undetected.
• Saudi Arabia reduced its July oil price for Asian customers for the second straight month.
• The Fed’s communication blackout has begun ahead of the 17 June FOMC decision. US May NY Fed 1-yr inflation expectations and Germany’s April factory orders are released today.