The price of West Texas Intermediate (WTI) crude oil increased to nearly $59.20 during early Asian trading, driven by fears that protests in Iran might disrupt oil supply. Concerns about this potential disruption place nearly 2 million barrels per day of Iranian oil exports at risk.
The US is considering military options in Iran amid tensions, which could influence oil prices further. Meanwhile, the US aims to reintroduce Venezuelan oil into the global market, with up to 50 million barrels poised for export. US demands for Venezuelan oil follow the arrest of Nicolas Maduro by US forces.
Market Impacts and Influences
Market participants await the American Petroleum Institute’s (API) report on US crude oil stockpiles, due on Tuesday. A larger-than-expected inventory draw could suggest strong demand and push WTI prices higher, while a build might point to weaker demand.
WTI, a quality crude oil sourced in the US, is a key benchmark for oil markets. Supply, demand, geopolitical events, and OPEC’s production decisions influence its price. Oil inventory reports from the API and EIA also impact pricing, with the EIA’s data considered more reliable. OPEC’s decisions on production quotas can significantly affect supply and prices, with OPEC+ including additional non-OPEC nations like Russia.
We recall the market situation in early 2025, when unrest in Iran briefly pushed WTI crude towards $60 a barrel. Today, the market is fundamentally tighter, with prices holding strong around $84.50 as of January 12, 2026. This reflects a more sustained supply deficit than the temporary geopolitical fears we saw last year.
OPEC+ and Market Discipline
The current market strength is not just about fleeting geopolitical risk, but rather the continued production discipline from OPEC+. The group is maintaining voluntary cuts of 2.2 million barrels per day, a policy which has placed a significant floor under prices. Unlike the situation in 2025, where the market debated potential supply additions from places like Venezuela, the focus now is squarely on this deliberate supply management.
On the demand side, fears of a global recession that were present in 2025 have largely eased, replaced by a picture of resilient consumption. The IEA’s latest report projects global oil demand will grow by a healthy 1.3 million barrels per day in 2026, driven by solid demand from Asian economies. This steady demand in a supply-constrained world creates a supportive environment for prices.
This dynamic means we must pay even closer attention to weekly EIA and API inventory data than we did last year. In a tight market, a surprise inventory draw can have an outsized impact on price, as we saw two weeks ago when a 3.5 million barrel draw pushed WTI up 2% in a single session. These reports are now a primary catalyst for short-term volatility.
For the coming weeks, we should consider option strategies that capitalize on this underlying strength and potential for volatility. Buying call options or establishing bull call spreads can provide upside exposure to any further supply shocks while defining risk. Given the high sensitivity to news, selling out-of-the-money puts could also be an effective strategy to collect premium, betting that the strong fundamental floor will prevent a significant price drop.
