Snapshot: Crude oil has plunged over 4% to trade below $78 per barrel, extending yesterday’s 4.9% sell-off as global supply expectations shift on a potential US-Iran interim agreement to reopen the Strait of Hormuz. This prospective supply breakthrough, slated for a Friday signing in Switzerland, completely offsets the tailwind of depleted US emergency reserves, which remain at their lowest level since 1983. A softer USD Broad Index at 119.5073 and stable US 10Y real yields at 2.17% offer no buffer against this rapid unwinding of the geopolitical risk premium.
- Technical Support: The clean break of the early March lows exposes the $75.50 level, with CFTC data showing speculators already liquidating 25,573 net-long contracts to leave net positioning at a modest 130,301 contracts (52nd percentile).
- NY Session Catalyst: Watch for draft leaks regarding Hormuz operating conditions and shipping security protocols, as any concrete implementation details will trigger a secondary wave of programmatic selling.
Bias into NY: Bearish. Momentum favours a continuation toward $76.20 as the market aggressively prices out the Middle East transit premium ahead of Friday’s Swiss summit.