WTI traded near $98.60 per barrel in Asian hours on Wednesday, after falling by over 4% the previous day. Prices rose as the UAE sought military action to reopen the Strait of Hormuz, while Iran warned of further retaliation.
The Wall Street Journal reported that Emirati officials are seeking a UN Security Council resolution to authorise a multinational mission to restore navigation through the strait. The UAE is also urging the US and allied countries in Europe and Asia to form a coalition to clear mines, escort commercial ships, and secure positions along the waterway if needed.
Us Iran Deescalation Outlook
US President Donald Trump said US operations could end before the strait fully reopens, with a withdrawal possible within two to three weeks. Iran’s president indicated willingness to end hostilities under certain guarantees, while uncertainty remains due to continued US military presence.
A Reuters survey showed OPEC output fell in March to 21.57 million barrels per day, down 7.3 million barrels per day month-on-month and the lowest since June 2020. The American Petroleum Institute reported US weekly crude stocks rose by 10.263 million barrels in the week ending 27 March, after a previous 2.3 million-barrel rise, versus expectations for a 1.3 million-barrel draw.
With WTI crude oil trading near $98.50, the market is facing extreme uncertainty centered on the Strait of Hormuz. The push by the United Arab Emirates for a UN-backed military intervention has sent implied volatility soaring. This geopolitical tension is the single most important factor for traders to watch in the coming weeks.
We are processing a massive supply shock from the OPEC production drop of 7.3 million barrels per day in March. A supply cut of this scale, representing nearly 7% of recent global demand which hovered around 103 million bpd in late 2025, is a profoundly bullish signal. Traders anticipating further escalation might consider buying call options to capitalize on a potential price surge if the strait remains blocked.
Strategies For Extreme Volatility
However, powerful opposing forces suggest a sharp price reversal is also possible. The prospect of a US withdrawal within weeks and the massive, unexpected build of 10.263 million barrels in US crude stocks create significant downside risk. This scenario supports strategies like buying put options to protect against a sudden price collapse should a diplomatic solution emerge.
Given these conflicting signals, betting on a clear direction is highly speculative. A more prudent approach may be to trade the volatility itself, perhaps by using option strategies like a straddle, which involves buying both a call and a put. This strategy profits from a large price move in either direction, which seems probable given the current news flow.
We only have to look back to the market volatility in 2025 to see how quickly sentiment can shift based on supply fears. Geopolitical price spikes, like those we saw during the Red Sea disruptions, often lead to sharp but short-lived rallies. This historical pattern suggests any surge from the Hormuz crisis could reverse just as quickly, making flexible option strategies more appealing than rigid futures contracts.
In the near term, the key catalyst will be the outcome of any vote at the UN Security Council on the UAE’s proposal. Weekly EIA inventory reports will be crucial to see if the recent massive stock build is an anomaly or a new trend indicating falling demand. The two-to-three-week window mentioned for a potential US withdrawal also provides a critical timeframe for a major market shift.
