Iran has boosted crude production 25 percent this year and aims to reach an eight-year high for daily output of 4 million barrels by the end of the year. Customers in Asia account for the largest share of Iran’s new sales, according to shipping data. The nation dropped to fourth-biggest OPEC producer after international sanctions that restricted its supplies in 2012. It has since returned to third place after the sanctions were eased in January. Saudi Arabia has responded by boosting its crude and refined products exports.

“The market share battle between them and Iran is back on in a big way,” John Kilduff, partner at Again Capital LLC in New York, said by phone on Sunday. “This is a throwdown challenge that I’m sure the Iranians will match.”

Asian demand for crude is stalling as refineries from Singapore to China and South Korea are cutting operating rates amid a slump in margins and rising supply from state-owned giants, which can draw on large crude inventories that have built up over the past two years of low prices.

Eoin Treacy's view

With most Western headlines focusing on the ramifications of the refugee crisis on EU, it might be easy to forget that the war in Syria is a venue for Saudi Arabia and its allies to fight Iran and its allies. Napoleon said an army marches on its stomach, but funding is just as important as supply lines and the protagonists in this conflagration are heavily dependent on oil. By engaging in a price war Saudi Arabia is taking direct aim at Iran and other producers might be considered collateral, or perhaps convenient, damage.  

Brent Crude Oil’s bounce from the January lows has lost consistency; suggesting this year’s peak- to-date at $52.86 has at least near-term and potentially medium-term significance. It will need to demonstrate support above, or in the region of, $27 to confirm base formation development is underway. 

While crude oil prices hit a peak almost two months ago, oil shares have been slow to respond but are now playing catch-up by at least unwinding short-term overextensions relative to their respective 200-day MAs. 

The broader impact on the stock market is that large cap oil companies have been among the best performers on the S&P500 this year. The reversionary process currently underway has been a contributory factor in the pause in the Index’s short-term advance despite the outperformance of the technology and biotech sectors. Additional declines in oil and by extension oil shares could see the pause in stock markets last somewhat longer which could see a consolidation forming in the upper side of the underlying range.