WTI consolidated in Wednesday’s Asian session, trading just above the mid-$72.00s and holding near its lowest level since early March after touching that mark a day earlier. Market pricing reflected easing supply concerns as shipping activity through the Strait of Hormuz picked up and sanctions pressure on Iranian crude exports temporarily softened. Iran’s state-aligned Fars news agency, citing a military source, said a limited number of vessels were being allowed to pass through the strait each day under coordination with Iran’s Revolutionary Guards Navy.
The US Treasury issued a 60-day sanctions waiver authorising the production, delivery and sale of Iranian crude oil, petroleum and petrochemical products, with the relief valid until 21 August. Separately, narratives around Iran’s nuclear position diverged: President Donald Trump said Tehran had agreed to the highest level of inspections long into the future, while Iranian state media, citing the foreign ministry, said no new commitments had been made. Geopolitical risk premiums therefore remained in place, while the absence of firm selling below the 200-day SMA tempered downside momentum despite broader pressure on prices.
Iranian Supply and Downward Market Pressure
We are seeing WTI crude oil consolidating just above the mid-$72 mark, a price level not seen since early March. While the market seems quiet, the underlying fundamental pressures suggest a move lower in the coming weeks. The primary driver for this outlook is the increasing flow of oil from Iran.
The temporary easing of sanctions is already adding barrels to the global market, creating a clear headwind for prices. Recent tanker tracking data from June 2026 shows Iranian exports have surged by over 500,000 barrels per day this month alone, pushing their total output near post-sanction highs. This additional supply is hitting the market just as concerns over summer demand have failed to materialize, creating a notable surplus.
Strategic Trade Positioning Under Geopolitical Risk
Given this backdrop, we believe purchasing put options is a prudent strategy to position for a drop in price. We are looking at August 2026 WTI puts with a strike price around $70, allowing us to capitalize on a move below the current support level. This timing aligns perfectly with the 60-day sanctions waiver, which is set to expire on August 21st.
This scenario is reminiscent of the 2014-2016 supply glut, where a massive increase in global production caused crude prices to collapse from over $100 to below $30 a barrel. While the source of the supply is different today, the market dynamic of new production overwhelming demand is a powerful historical parallel. We see a similar, though less dramatic, price depreciation as a high probability event.
However, the conflicting reports on Iran’s nuclear deal and the fact that prices are holding above the key 200-day moving average requires us to be cautious. For this reason, we favor using bear put spreads, such as buying the $70 put and selling the $65 put. This strategy limits our upfront cost and caps our risk if a sudden geopolitical event causes prices to spike unexpectedly.
We must remain vigilant about activity in the Strait of Hormuz, as nearly 20% of the world’s total oil consumption passes through it daily. Any disruption to the current fragile agreement on shipping could instantly reverse the downward price pressure. Therefore, any bearish positions should be sized to account for this persistent headline risk.
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