WTI rose for a third session and traded near $64.20 a barrel in early European hours on Tuesday. Prices were supported by tensions between the US and Iran, with traders awaiting the API weekly inventory report due later in the day.<\/p>\n
The US warned American-flagged vessels to avoid Iranian waters when passing through the Strait of Hormuz. The US and Iran indicated talks would continue after discussions in Oman last Friday.<\/p>\n
Iran maintained its position on uranium enrichment, which remains a dispute for Washington. Diplomatic contacts may limit further gains in crude prices.<\/p>\n
Supply conditions also weighed on the outlook as Venezuelan exports rose to 800,000 bpd in January from 498,000 bpd in December, according to Reuters. Higher exports could add to global supply.<\/p>\n
Markets also monitored India\u2019s imports of Russian oil during US\u2013India trade discussions. A reported freeze on Russian crude purchases could affect flows from one of the largest buyers of Russian oil and influence global prices.<\/p>\n
We are seeing a much different picture today than we did this time last year, when WTI was trading around $64 per barrel. The market has priced in a significant geopolitical risk premium since then, with crude now holding firm above $78. This shift suggests the concerns from early 2025 about US-Iran tensions have not eased but have instead intensified.<\/p>\n
Looking back, the Omani-hosted talks in 2025 failed to produce a lasting agreement, and we have seen several minor clashes in the Strait of Hormuz since. This has kept volatility elevated, which traders should expect to continue. War risk premiums for tankers transiting the Strait have jumped by 40% since the fourth quarter of 2025, a tangible cost that is supporting higher underlying prices.<\/p>\n
Furthermore, the anticipated supply-side headwinds we watched in 2025 never fully materialized. Venezuelan exports, which briefly touched 800,000 bpd, have since fallen back, with recent EIA data showing output has struggled to stay above 750,000 bpd due to infrastructure issues. That potential source of market relief has effectively been taken off the table for now.<\/p>\n
The concerns about India\u2019s imports of Russian crude proved to be well-founded, providing another bullish catalyst. Following diplomatic pressure, Indian refiners reduced their intake of Russian oil by nearly 300,000 bpd in the final quarter of 2025. This has forced a key buyer to compete for barrels from other sources, tightening the global market.<\/p>\n
For the coming weeks, options traders should consider strategies that benefit from this sustained volatility, like long straddles. While the trend is upward, any surprise diplomatic breakthrough could cause a sharp correction. The implied volatility on front-month WTI options is now sitting near 35%, up from the low 20s we saw for much of 2023 and 2024.<\/p>\n
We must also weigh the demand side of the equation, particularly out of China. Recent economic data has been mixed, with China’s latest Caixin Manufacturing PMI reading of 50.8 showing only marginal expansion. This lukewarm demand picture could create a ceiling for prices, suggesting that buying far out-of-the-money call options may be an unnecessarily risky strategy.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" WTI neared $64.20 as US-Iran tensions supported prices, while rising Venezuelan exports and trade talks weighed.<\/p>\n","protected":false},"author":62,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-41461","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t