The markets are being driven by combatants, and whatever next tweet or statement one of the three make as we just don't know how to price risk. Unfortunately, this is likely to continue.
CRUDE OIL
Crude oil continues to be noisy on Wednesday as we are trying to sort out whether or not the Americans and the Iranians are actually going to speak or if the tensions in the Strait of Hormuz are going to continue to increase. With that being said I think they will continue to see a lot of noisy behavior and with that being the case I think if the market has shown us anything during the trading session on Wednesday is that it really doesn't know what to do.
And quite frankly the markets are being driven by the United States, Iran, and Israel and whatever next tweet or statement one of the three make as we just don't know how to price risk. This is particularly true in the crude oil market as it is so obviously heavily influenced.
Supply Dynamics and Geopolitical Headwinds
All things being equal this looks like a market that's trying to find a range between $85 and $100 but you should also keep in mind that the light sweet crude oil market does not trade at the same type of premium Brent does because its proximity to the United States and not the Strait of Hormuz insulates it somewhat although one would expect more exports coming out of America driving up price.
If traders continue to deal with signs of peace and then talks of the Iranians not accepting the conditions, then that will continue to make this market very difficult. I do think there's a little bit of an underlying bid here at least until the war is over and therefore short-term pullbacks probably end up being short-term buying opportunities, but this is a market that could jump at any given moment based on a random headline.