Global macro overview for 16/10/2017:
Potential renewed US nuclear sanctions against Iran, as well as the conflict in Iraq, are currently supporting the prices of Crude Oil. Last Friday, the Trump administration refused to certify, that Iran is complying with the requirements agreed during 2015 meeting. On the other hand, independent inspectors claim that Iran's nuclear program meets the agreement limits. The last sanctions on Iran were significant as the output of 1mln barrels per day was cut off from the global supply market. This time the consequences of the situation might be different as the US is likely to act alone on sanctions to Iran.
Under US law regulations, the US president must certify every 90 days that Iran is complying with the deal. Congress will now have 60 days to decide whether to reimpose economic sanctions on Tehran. Moreover, OPEC should extend the production cuts to prevent a new surge in oversupply and a slide in the price of oil. As a result, Iran's economy might suffer a substantial loss as most of the economists estimate that if sanctions are implemented, it could put a few hundred thousand barrels of Iranian oil exports at risk. As a result of this situation, the price of oil cloud easily breaks out above 2017 high at the level of $55.25.
Let's now take a look at the Crude Oil technical picture in the H4 time frame. A strong reversal from 50% Fibo at the level of $49.22 has hit the gray supply zone between the levels of $51.98 - $52.86. There is a visible bearish divergence between the price and momentum indicator, so the intraday correction is due. The nearest technical support is seen at the level of $51.45.
