The price of oil is up 7% today on a resumption of hostilities in Iran.
WTI was last up $4.85 to $75.45. It had been trading near $72 until the US launched strikes followed by Trump saying he could strike again tonight. He also said the MOU was "dead", though he added the caveat that negotiations would continue and that he thought Israel would leave Southern Lebanon.
Iran has responded with threats of its own and struck targets in Bahrain and Kuwait. It once again threatened energy infrastructure in the region if its infrastructure is targeted. The most-damaging comments from Trump might have been insults.
"They're scum. They're sick people. They're led by sick people," he told reporters in Ankara. "As far as I'm concerned, it's just a waste of time dealing with them," he said, before adding: "Now, I'll let our wonderful negotiators keep talking if they want, but I don't see it. I don't like these people, you know that."
That's not exactly a friendly position and he also said that they were doing some things that could lift oil prices. I take that last bit as a sign that he's still watching crude and will TACO at some point. He has been railing against oil companies and refineries for weeks to lower gasoline prices but cracks are still high. Today, China also announced that it was once again allowing its refineries to export finished products in another tailwind for crude.
Technically, the rally is a near-perfect bounce from support at pre-war levels. We tested the February highs, stabilized and now there is a strong bounce as Trump threatens to blockade Iran's oil and Iran threatens to close the Strait of Hormuz once again.
Modest technical targets would target the 38.2% retracement to the June high of $98 and that comes in at $78.51. The 50% level is at $82. A 50% retracement to the war's high would be $93.
The broader markets are also trading on the war once again with Treasury yields up 5-8 basis points across the curve and the S&P 500 down 0.9%. There is weakness in software, travel stocks and rate-sensitive names like home builders. Naturally, energy stocks are strong outperformers.