Crude oil rejects key resistance despite elevated tensions

Crude oil overnight shied away from our key resistance at $72.50 highlighted in this article here yesterday ig.com/au/news-and-trade-ideas/what_s-next-for-the-crude-oil-price-after-the-escalation-in-midd-241002 as the market pushed back expectations of an Israeli response to Iran's missile attack until the end of the Rosh Hashanah holiday tomorrow.

While its possible, we think its unlikely that Israeli will launch an attack on Iranian oil fields as such a move would likely drive oil prices toward $80 - an outcome which would be frowned upon by Israel's allies, who are making strides against inflation.

Instead, strategic Israeli strikes on critical weapons factories and military objectives are more probable, like the events in April. Furthermore, any potential loss of Iranian supply will likely be offset by the return of Libyan oil and increased Saudi production, as voluntary supply cuts expire on December 1st.