WTI steadied above $91.00 on Friday, trading in a $91.00–$92.00 band after pulling back from weekly highs near $96.00. Prices softened after reports that Gulf producers raised crude flows in September, while tensions around the Strait of Hormuz continued to underpin the market following attacks by the Iran-backed Houthis from Yemen. Alongside the supply story, developments in US-Iran contacts and a renewed ceasefire initiative kept the geopolitical outlook in focus.
Bloomberg data showed Saudi oil exports through the Strait of Hormuz rising to a wartime peak of more than 5 million barrels a day so far in September, compared with 3.4 million in August and 4.5 million in July, and sources said Iraq, Kuwait and the United Arab Emirates have also increased shipments, including via vessels with transponders switched off. The Financial Times reported Tehran has offered a seven-day ceasefire proposal, linked to a June Memorandum of Understanding and the reopening of the strait. US figures added a counterweight: commercial oil stockpiles rose by 2.96 million barrels in the week of 19 September versus expectations for a 700K draw, after a 640K fall the prior week.
Trading Strategies Amid Range-Bound Volatility
We recommend that derivative traders prepare for a period of range-bound volatility between $91.00 and $96.00 in the coming weeks. With WTI crude consolidating after its recent retreat, executing short-term iron condors or strangles could help capitalize on this lack of a clear directional trend. This consolidation is heavily driven by the clash between rising Gulf supplies and persistent geopolitical risks.
On the supply side, we are seeing a significant influx of physical crude as Gulf nations ramp up their exports. Specifically, Saudi Arabia’s shipments through the Strait of Hormuz surged to over 5 million barrels a day this September, a massive leap from August’s 3.4 million barrels. Additionally, the latest U.S. Energy Information Administration data showed an unexpected commercial inventory build of 2.96 million barrels, further dampening immediate upward price momentum.
Geopolitical Risks and Tactical Approaches
However, we advise against heavy short positions due to the highly unpredictable geopolitical climate in the Middle East. Although Iran has proposed a seven-day ceasefire, ongoing Houthi missile strikes keep the risk of sudden supply disruptions extremely high. Traders should consider buying out-of-the-money call options as a cheap hedge against any sudden spike back toward the $96.00 mark.
Historically, during periods of similar supply-demand tug-of-wars, implied volatility tends to overstate actual price moves, making option-selling strategies highly profitable. We should closely monitor the weekly inventory reports and any official updates regarding the Strait of Hormuz transit data to adjust our strikes. For now, playing the margins of the $91.00 to $96.00 range remains the most tactical approach.
