The price of crude oil jumped yesterday after the US president sent a major threatening tweet to the Iranian leader. The tweet came after the Iranian leader criticized the US and the Trump administration for threatening to sanction the country. As you recall, a few months ago, the administration exited the Joint Comprehensive Plan of Action (JCPOA), with the aim of pressuring Iran to stop the development of missiles. The administration argued that the deal was not comprehensive enough.

Then, the administration announced that it would impose sanctions on all countries and companies that deal with Iran. This led to a mass exodus from Iran by companies that had moved there after the Iran deal was signed. Companies had a choice on whether to select Iran or the United States, which is a bigger market.

On Sunday, when addressing Iranian diplomats, the Iranian leader said that the country would consider shutting the passage of gulf states crude if the US goes on with the tariffs. If this happens, it would be a major blow to the supply chains of global crude oil. Ultimately, it would lead to higher crude prices.

Later on yesterday, the price of crude oil fell as traders ignored the longer-term prospects and shifted to the demand and currency issues. Traders anticipate lower demand mostly because of the emerging markets. These countries have been affected by the stronger dollar, which makes it difficult for them to import. While the price of Brent has gone up by 11% this year, in many EM countries, the price has gone up by more than that.

Brent has reached $72.83, which is lower than the yesterday’s high of $74.50. This price is in line with the 25-day moving average and lower than the 50-day moving average. It is also along an important support as shown below. The price is also moving in a sideways direction. At this point, the price will see some major movements today as traders react to the API crude stocks data.

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