Crude Oil: Iran Sanctions and Trade Talk Speculation Fuel Gains

Paul-Rejczak Paul Rejczak Apr 17, 2025

Is crude oil breaking out of its recent trading range?

Crude oil closed 1.86% higher on Wednesday despite the surprisingly hawkish speech from Fed Chair Powell. Today, oil is extending its gains, up approximately 1.7% and reaching its highest level since April 7. This upward momentum appears driven by new US sanctions against Iran and cautious optimism surrounding potential trade negotiations.

For oil markets specifically, these developments are worth monitoring:

  • The US has imposed new sanctions on Iranian oil exports, including against a China-based "teapot" oil refinery, increasing supply concerns.
  • Markets are showing optimism that negotiated settlements can be reached on tariffs, with Japan showing progress in discussions.
  • Long holiday weekend (Easter) may stabilize the market, with today being the last settlement day of the week.
  • Markets remain highly sensitive to news, with oil trading largely following broader market sentiment.

 

Crude Oil: Iran Sanctions and Trade Talk Speculation Fuel Gains - Image 1

 

Oil: New Uptrend or Just a Rebound?

Yesterday's rally retraced more of the recent sell-off, and today's continuation appears to be confirming an upward reversal.

Key technical levels to watch include the recent highs around $62 and resistance around the $65-66 range, which previously acted as support.

Crude Oil: Iran Sanctions and Trade Talk Speculation Fuel Gains - Image 2

 

Inventories: Mixed Signals

Wednesday's EIA data showed that U.S. gasoline and distillate inventories increased last week by a relatively small amount, providing additional support for prices.

However, broader concerns remain as OPEC, the International Energy Agency, and several major banks (including Goldman Sachs and JPMorgan) have recently cut forecasts on oil prices and demand growth due to global trade uncertainties.

Crude Oil: Iran Sanctions and Trade Talk Speculation Fuel Gains - Image 3

 

Conclusion

Crude oil is showing strength, with prices reaching two-week highs as geopolitical tensions increase supply concerns and trade talk optimism improves demand outlooks. The market appears to be breaking out of its recent consolidation, potentially signaling the start of a new short-term uptrend.

For now, my short-term outlook is neutral.

I think that no positions are justified from the risk/reward point of view.

Here’s the breakdown:

  • Crude oil rose 1.86% on Wednesday and is gaining an additional 1.7% in today's trading.
  • New US sanctions on Iran are creating supply concerns, providing fundamental support for higher prices.
  • The medium-term outlook appears cautious despite today's gains, as the market remains below key technical levels.
  • The long holiday weekend may provide a stabilizing effect, potentially allowing this rally to consolidate.
  • In my opinion, the short-term outlook is neutral.


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Paul Rejczak,
Stock Trading Strategist