With the US and Iran on the verge of formally signing a peace deal, crude oil has already priced this in as a done deal. The asset is now at a mere $74, not far above where it was prior to the full-scale escalation of the conflict.
Oil on the Daily Timeframe
The true downside target for price to fill in the short term, is closing the open gap that was left right as the conflict escalated. This level comes in at $67.29, with a further, longer-term target upon full normalisation of trade flows located at $60. This level was the Volume Point of Control when looking at last year’s range, and including this year’s breakout.
Market Auction Theory dictates that as price breaks out from one range ($90–$120), price tends to see the Point of Control of a previous range, thus warranting the longer-term $60 target.
The main reason for this being a longer, rather than short-term target, is because it will take a couple of months for trade flows to return to their pre-conflict levels, thus warranting slightly higher oil prices than before, although the exact level where oil will now normalise over the coming weeks is uncertain.