Crude oil is caught between hopes of a US-Iran deal and escalation risks. What's next?

Crude oil has entered a consolidation phase recently as markets await new US-Iran developments. So far, nothing has changed. Trump told CNN that the US is unlikely to resume military action against Iran if negotiations make sufficient progress on Tehran’s nuclear programme and the reopening of the Strait of Hormuz. However, he stressed that any decision to avoid further strikes would depend on Iran agreeing to a strong enough deal, adding that the US remains ready to take military action if necessary.US Secretary of State Rubio said negotiations with Iran have made little progress, describing Tehran's demands as unacceptable, but stressed that Washington remains open to pursuing a diplomatic resolution.US military strikes remain an option as Trump could consider limited strikes against Iranian nuclear facilities rather than broader attacks on energy infrastructure.A breakthrough in negotiations would trigger a significant selloff and take oil prices back to pre-war levels relatively quickly. An escalation, on the other hand, could trigger another rally on a rising risk premium, although there’s also a chance that it could be short-lived if Trump launches limited strikes just to save face before exiting the war.   CRUDE OIL TECHNICAL ANALYSIS – DAILY TIMEFRAMEOn the daily chart, we can see that crude oil(CFD contract) is consolidating near the key 87.00 handle. We can expect the buyers to continue to step in around these levels, with a defined risk below the 87.00 level, to position for a rally into the 110.00 resistance. The sellers, on the other hand, will look for a break to increase the bearish bets into the 68.00 support next, with the 80.00 handle as the first target.CRUDE OIL TECHNICAL ANALYSIS – 4 HOUR TIMEFRAMEOn the 4 hour chart, there’s not much we can glean from this timeframe, but the broken channel could act as resistance in case the price retests the bottom trendline. We can expect the sellers to step in there, with a defined risk above the trendline, to keep targeting new lows. The buyers, on the other hand, will look for a break higher to increase the bullish bets into the 110.00 resistance next.CRUDE OIL TECHNICAL ANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hour chart, we have a minor support zone around the 89.00 level where the price got rejected from a few times in the past days. The buyers will likely continue to step in around the support, with a defined risk below it, to keep pushing into new highs. The sellers will want to see the price breaking lower to extend the pullback into the 87.00 level next. The red lines define the average daily range for today. UPCOMING CATALYSTSTomorrowwe have the US CPI report. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the US PPI data. The focus will remain on US-Iran developments. This article was written by Giuseppe Dellamotta at investinglive.com.