WTI US Oil traded near $65.15 on Wednesday, up 1.53%, extending a rebound that started earlier in the week. Prices rose amid worries about global supply linked to Middle East tensions.
US–Iran relations remained strained, raising concerns about tighter sanctions or disruptions to Iranian exports. Reuters reported that the US may consider intercepting vessels carrying Iranian crude if nuclear talks collapse.
Supply Risks Back In Focus
In Asia, India reduced imports of Russian oil during trade negotiations with the US. It increased purchases from the Middle East and West Africa, supporting demand for some crude grades.
Gains were limited by rising US supply. The American Petroleum Institute reported a 13.4 million-barrel build in US crude inventories for the week ending 6 February, the largest since early 2023.
Traders awaited official figures from the Energy Information Administration to confirm or dispute the build. Markets also watched upcoming reports from OPEC and the IEA.
The IEA warned global supply could exceed demand this year, which could lead to a surplus. WTI pricing stayed focused on both geopolitics and data on production, consumption, and stockpiles.
Positioning And Hedging Ideas
We are seeing a familiar dynamic in the oil market, very similar to the one we navigated in February of 2025. Back then, the market was torn between Middle East supply fears and large builds in US crude stockpiles. Today, with WTI trading around $78 a barrel, geopolitical tensions in the Red Sea are once again pushing prices up, creating a tense environment for traders.
The continued risk of supply chain disruptions, coupled with OPEC+ signaling it will maintain production cuts through the second quarter, presents a clear upside risk. Recent data showing China’s manufacturing PMI rising to 50.8 also suggests demand from Asia is strengthening. We believe traders should consider buying out-of-the-money call options on April and May contracts to capitalize on any sudden price spikes.
However, the upside is being checked by strong US production, which has been hovering near the record highs we saw in late 2025. While the latest EIA report showed a smaller-than-expected inventory build of only 1.2 million barrels, overall US crude stocks remain elevated. This persistent supply acts as a powerful cap on how high prices can realistically go in the short term.
This conflict between bullish sentiment and bearish fundamentals has increased implied volatility in the options market. This makes selling premium an attractive strategy for some, such as selling cash-secured puts below the $75 support level. This allows traders to collect income while defining their entry point if the market pulls back.
We also recall the IEA’s warnings from last year about a potential supply surplus, a risk that still exists if global economic growth falters. Those holding long positions should therefore look at buying puts to hedge against a sudden drop in demand. This provides a necessary layer of insurance in a market that is being pulled in two different directions.
