Oil slips on de-escalation hopes

• Brent slips over 3% on Wednesday on de-escalation hopes
• Trump is seeking a one-month ceasefire with Iran
• Iranian officials deny Trump's claim of private talks
• Key levels of interest at $100, $110 and $114

Brent slipped over 3% Wednesday (Asian session) following reports of a US diplomatic push to end the war with Iran.

The global commodity is trading below $100, shedding over 15% from the weekly high of $114.

WHY?

The prospect of cooling conflict and a possible end to the war in Iran may fully re-open the Strait of Hormuz – a critical energy chokepoint.

THE LOWDOWN…

• Donald Trump is seeking a one-month ceasefire with Iran and submitted a 15-point plan through Pakistan to end the conflict.

• U.S and a group of regional mediators are discussing the possibility of holding high-level peace talks as soon as Thursday.

• Iranian officials have denied Trump’s claims of private negotiations but have confirmed that they have received the 15-point proposal – agreeing on some key points.

• Trump has suspended planned strikes on Iranian power plants until Friday.

WHAT NEXT?

• ·      Any signs of easing tensions or progress with peace talks may raise hopes for an end to the Iran war. If this allows US ships to pass through the Strait of Hormuz, oil prices may sink as supply fears cool.

• ·      Should tensions escalate further with both sides targeting key energy infrastructure, this could lead to higher oil prices amid supply shocks.

POTENTIAL SCENARIOS:

BULLISH – A solid move back above $100 may open a path toward $110 and $114.

BEARISH – Weakness below $100 could see Brent test $90 and $84.