WTI futures on NYMEX rose 0.5% to about $82.10 in European trading on Thursday, underpinned by concerns over potential supply disruption around the Strait of Hormuz. The United States and Iran have each stated they control the passage, which carries roughly one-fifth of global energy supply, while shipping volumes have thinned. Kpler data showed six vessels transited on August 10 versus a 10-day average of about 11, and that compares with pre-war flows of 130 to 140 ships a day.
OPEC revised its global oil demand growth forecast for the current year to 580,000 bpd, down from 780,000 bpd previously. In technical terms, WTI held above the 20-day EMA at $80.07 after rebounding from a 61.8% retracement of the July 2 low at $67.09 to the July 23 high at $92.25. RSI (14) was 52.55, with resistance at $82.54 then $86.11; support sat at $80.07 and $79.65, with further levels at $76.75, $72.64 and $67.40.
Geopolitical Risks And Trading Strategies
We believe derivative traders should prepare for heightened volatility in WTI crude oil as geopolitical tensions in the Strait of Hormuz severely choke global energy flows. Recent tracking data shows daily shipping traffic through this vital corridor has plunged to just six vessels, a staggering drop from the historical pre-war average of over 130 ships per day. With both the US and Iran asserting control over this chokepoint, which historically handles about 20% of global petroleum liquids, the threat of prolonged supply disruptions will keep a strong floor under oil prices.
To capitalize on this momentum, we recommend watching key technical levels, as WTI currently trades constructively around $82.10, comfortably above its 20-day Exponential Moving Average of $80.07. Traders can consider buying short-term call options if the price tests immediate support near the $80.00 level, targeting initial resistance at $82.54 and then $86.11. This bullish setup is backed by a neutral Relative Strength Index of 52.55, which suggests there is still plenty of room for steady upward growth before the market becomes overbought.
Balancing Supply Threats And Demand Weakness
However, we must balance this bullish outlook against weaker demand signals, especially after OPEC slashed its global oil demand forecast down to 580,000 barrels per day. Historically, when severe supply threats clash with weakening global demand, energy markets experience sharp, unpredictable swings rather than a smooth, one-way rally. To navigate this highly volatile environment, traders should look into volatility-based strategies like long straddles or bull call spreads to limit downside risk while capturing sudden geopolitical price spikes.
We can also look at historical precedents, such as the 1980s Tanker War, where similar disruptions in the Persian Gulf led to brief but intense price spikes. Additionally, with the US Strategic Petroleum Reserve remaining near historic lows of around 375 million barrels, the global market has a much smaller safety cushion to absorb sudden supply shocks. This lack of a reserve buffer means any further military escalation in the Hormuz Strait could quickly trigger panic buying and push WTI past the $86.11 resistance level.
