As the adage says: "Buy the rumor and sell the news"... it is before an event that you must buy the market... while it is still in a state of rumor. And once the rumor becomes news, that's when you have to sell and get out of the market.
This is EXACTLY what happened with oil on Monday!
The price had already risen enough upstream to be able to remain stable when the market opened at 12:05 a.m. and began its descent during the Asian and European session.
What will always amaze me is to read the astonishment of major financial analysts who, probably, expected a crazy bullish gap when the stock market opened on Monday morning.
Of course, I admit... we are not immune to high frequency on the market... but each time, no matter how violent the HF is, it always decompresses to return to balance. And even there, the algorithms of the robot traders are not even excited ^^, which is to say...
Iran had still made as much noise as possible via press conferences and social networks before, calling out foot calls and seeing smoke signals so that the satellites could clearly understand the messages and the direction of the attack.
Moreover, the Shaheed drones (those sent by Iran on Saturday) in addition to costing only 20,000 USD... it seems that they make a horrible mobile noise... So in addition to taking between 5 to 6 hours to arrive at their destination they make a horrible backfiring noise in the sky.
Personally I have never seen a Shaheed drone flying, it's the ones that have a triangular shape, on the other hand the Ukrainians often see them because they are also the ones used by the Russian army. And it seems that we can hear them coming around.
We must also be able to differentiate between the Russian-Ukrainian and Iranian-Israeli conflict... at least at the oil level.
Russia, a large oil exporting country, was exactly the 2nd largest oil importer behind the United States (And yes, I didn't think it was Saudi Arabia, it's an illusion).
Iran before the sanctions imposed by the USA in 2018 exported 2.5 million barrels per day, American sanctions reduced by 80% to 95% according to analysts. Revenues falling from 119 billion dollars in 2011 to 9 billion in 2019... since then they have been thriving and have made up for it by producing an average of 3.2 million barrels per day since the start of 2024.
If you see where I'm going with this...?
No?
Well, when war was declared in Ukraine, Russia was not under any oil sanctions... the various sanctions packages only arrived much later.
This caused an oil shock at the start of the conflict. Because traders expected this kind of sanctions... so they traded the rumor.
While for the Iranian-Israeli conflict... there are ALREADY oil sanctions, so one more war will have difficulty doubling the price of a barrel as was the case in 2022.
Besides, if you are an oil trader, you must surely remember the day of December 5, 2022... the day when the boycott of Russian oil came into force!
The entire rise in price happened upstream and on the day of the announcement Crude WTI went from $82.60 to $76.80 everyone sold the news.
On December 9, 4 days later, WTI reached $70.20...
This is the "Kiss Cool" effect of buying the rumors and selling the news... for a novice, or anyone outside the market, it is incomprehensible, because illogical... but not for a trader ^ ^.
This is why we already had a nice Gravestone Doji on Friday at the close... but the fall on Monday was filled to finally give us a nice Dragonfly at the close.
So why this indecision?
Well, despite Iran's speech which emphasized that they are now even with Israel... Mr. Nentanyahu does not want to stop there... because for him that would mean that he has no didn't have the last word... arhhhh these egos... Yet it is still them who have just inflicted two rather severe "slaps" on the Iranian regime.
Should we remember that the regime is not Catholic? They're not supposed to turn the other cheek.
In any case, the Americans have made it clear that they do not support if there is a response from Israel towards Iran. They would be present to defend the Hebrew state if there was another attack... but they would in no way go on the offensive. Like that, it's said and it's clear and clear! STOP.
Now, from a market perspective... there would be potential doubt about Israel's response to the country's oil fields and energy structures.
Which would still be a bit stupid... should we remind them that Israel is not an oil country and that to carry out their offensive on Gaza they really need oil... see move on a barrel above $90 or even $100 is not in their interest.
All this to say that we should not confuse the impact of the Russian-Ukrainian conflict with the one we are currently experiencing between Israel and Iran. Currently the price is stagnating and waiting... it has already priced the risk premium of the current conflict... if everything remains as usual, it would be very likely to see the price of a barrel fall and why not rebound to $80 before to resume the ascent in view of the summer High driving season. And if Iran decides to block the Strait of Hormuz (see post: "The slap in the face too much..?" ) there, we will indeed be able to revise expectations on the price of a barrel...
Let's stay on the lookout...!
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