Crude oil prices edged lower on Tuesday in quiet trading, but stayed within February’s range. US benchmark WTI slipped from Monday’s $63.70 high and held above $63.00 at the time of writing.
With many Asian markets shut for the Lunar New Year and the US returning from a long weekend, trading volumes were low. Attention remained on US–Iran talks, due to resume in Geneva later on Tuesday.
Market Focus Shifts
US President Donald Trump said he would be involved “indirectly” in the discussions. Iran’s foreign minister said the US stance on the nuclear issue had moved towards a “more realistic one”.
The US has deployed aircraft carriers to the Arabian Sea, indicating military action remains an option. Separately, Reuters reported that OPEC+ members are considering restarting output increases from April, in expectation of higher global demand during the western summer season.
We are seeing a familiar tension in the oil markets, though the specifics have changed from a year ago. Looking back at this time in 2025, WTI crude was trading quietly around $63 per barrel with all attention on the US-Iran talks. Today, with WTI hovering near $84.50, the focus has shifted to supply chain security and stronger than expected global demand.
Last year, the possibility of OPEC+ increasing output for the summer season kept a lid on prices. Now, in February 2026, the cartel is maintaining production discipline despite the latest EIA report showing global demand in the last quarter outstripping forecasts by nearly 400,000 barrels per day. This supply tightness is a key difference from the sentiment we saw in early 2025 and supports current prices.
Options And Volatility
The quiet, range-bound market of February 2025 suggested selling volatility was a viable strategy. In contrast, the CBOE Crude Oil Volatility Index is now elevated, sitting around 42, reflecting uncertainty about potential disruptions in the Strait of Hormuz. This suggests traders should consider buying options, like straddles or strangles, to profit from a significant price move in either direction over the coming weeks.
While last year’s trigger was the outcome of diplomatic talks in Geneva, the immediate catalysts are now different. We are closely watching the upcoming OPEC+ technical meeting in early March for any change in production guidance. Any escalation in maritime tensions in the Arabian Sea could also cause a sudden price spike, making defensive long call positions attractive.
