WTI US Crude Oil traded just below $63.00 on Monday after a modest rise in Asia, up less than 0.40% on the day. It stayed near a nearly two-week low set on Friday as markets awaited the second round of indirect US-Iran talks this week.
The US and Iran restarted talks earlier this month on Iran’s nuclear programme, and a possible deal was discussed for the next month. Reduced expectations of conflict lowered concerns about supply disruption, which weighed on oil prices.
Geopolitical Risk And Supply Fears
The US sent a second aircraft carrier to the region and prepared for the chance of a sustained military campaign if talks fail. Iran’s Revolutionary Guards said they could retaliate against US military bases if strikes occur, which kept some geopolitical risk priced in.
On Friday, softer US consumer inflation increased expectations that the Federal Reserve could cut borrowing costs in June. The US Dollar showed limited demand, supporting USD-priced commodities such as oil.
Further selling would be needed to confirm a near-term peak around $66.25. That level was described as a nearly five-month high reached in January.
We are seeing a familiar pattern in the oil markets today, February 16, 2026, with West Texas Intermediate trading near $82 per barrel. The current tension is reminiscent of market conditions in April of last year, when prices hovered in the low $60s, caught between diplomatic progress and military posturing. This historical setup provides a valuable guide for positioning in the coming weeks.
Options Positioning And Volatility
The potential for a revived US-Iran nuclear agreement creates a significant headwind for prices, much like it did in 2025. Recent reports that Tehran is showing increased compliance with IAEA inspectors have already pushed crude down 3% this month, according to data from CME Group. For traders anticipating a successful deal, buying out-of-the-money put options with April expiry offers a way to profit from a potential drop towards the high $70s.
However, the geopolitical risk premium remains a key factor that cannot be ignored. Ongoing tensions in the Strait of Hormuz serve as a constant reminder of how quickly supply fears can ignite the market, similar to the military posturing we observed last year. We saw this premium add over $5 to the barrel during a flare-up in the third quarter of 2025, suggesting that long call options remain a prudent hedge against sudden disruptions.
Unlike last year, a strong US dollar is now weighing on the commodity. The surprisingly robust January 2026 jobs report, which showed a gain of 225,000 jobs, has diminished expectations for near-term Federal Reserve rate cuts. This monetary policy divergence is strengthening the dollar and capping oil’s upside potential.
This tug-of-war between bearish diplomatic news and bullish supply risks is increasing implied volatility in the options market. Given the uncertainty, traders should consider strategies that benefit from a large price move in either direction, not just a specific directional bet. A long straddle, involving the purchase of both a call and a put option with the same strike price and expiry, could prove effective in this environment.
