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Breaking news! Oil prices crash, Iran ensures safe passage through the Strait of Hormuz

The situation in the Middle East has been truly unpredictable these days, causing turbulence in the global financial markets. Just now, WTI crude oil prices plummeted 11%, dropping from $102 to currently $90.6. The reason is that the Iranian Islamic Revolutionary Guard Corps Navy issued a statement saying, “As the threat from aggressors has been eliminated, new regulations have taken effect. We will ensure the safe and stable passage of ships through the Strait of Hormuz.” This means the Strait of Hormuz, which has been closed for two months, is about to fully reopen, allowing stable exports of Middle Eastern oil. The foundation for high oil prices is gone, and the oil bulls’ sky is falling!

Bullish for gold and Bitcoin, bearish for crude oil

As mentioned above, free navigation means the foundation for high oil prices no longer exists, which is bearish for oil. Meanwhile, a sharp drop in oil prices will reduce global inflation expectations, thereby decreasing the likelihood of interest rate hikes by central banks worldwide. Global funds, especially US liquidity, will improve, benefiting commodities, gold, and Bitcoin. Currently, oil has already fallen 11%, and attention can be paid to the support at the $85 mark; gold has surged 3%, trading at $4,710, with a key focus on whether the $4,800 resistance level will be broken in the future.

Follow-up focus — whether the promise can be smoothly fulfilled

Since the US-Iran conflict, the Strait of Hormuz has opened and closed multiple times. This is not the first time, but the reason this time has such a big impact on oil prices is mainly because the announcement came from the Islamic Revolutionary Guard Corps, which is known to be Iran’s most hardline faction. An announcement from them about navigation suggests that different factions within Iran may have unified their opinions, and the promise is likely to be fulfilled. However, it cannot be ruled out that Iran might manipulate oil prices for profit in financial markets and may have repeated actions. Therefore, the key point to watch is when the first oil tanker will safely pass through the Strait of Hormuz.

Operational advice — before the agreement is implemented, lightly buy crude oil

Given the current crash in oil prices, shorting is obviously not advisable. Since there is still a possibility of fluctuations before Iran’s promise to open the strait is fully realized, you can lightly buy crude oil, betting on whether news will change and cause a rebound in oil prices. The stop-loss can be set at the $85 support level. That’s all for now. Wishing everyone daily prosperity!