WTI crude pushed to a 22-week high after two days of Houthi attacks in Saudi Arabia and reported strikes on shipping leaving the Strait of Hormuz. The contract broke above the $95.00-$101.00 band that held from Monday to Thursday, climbing from near $98.50 to just under $103.00, and it was trading in the top fifth of the session’s range. Saudi Aramco told remaining staff on Thursday to leave its Dhahran headquarters after debris from a Houthi drone killed two people at the Shaybah field, while UK Maritime Trade Operations said on Friday a tanker was hit by an unknown projectile as it left Hormuz near Limah in Oman.
The supply backdrop remained the focus. US Ambassador to the United Nations Waltz told the Financial Times the war could last another year, while President Trump said the US could end it very quickly; Waltz also said the Navy can keep Iran’s ports blockaded for the foreseeable future, and Kpler expects that to cut Iran’s crude oil revenue to zero by mid-December. On the charts, WTI moved past the 15 September peak just above $102.00; the rise from the 6 August low near $74.00 is about $28, the 50-day EMA is just above $91.50, and daily momentum has reached overbought for the first time since mid-September.
Volatility Risks and Trading Opportunities
With WTI Crude breaking past $102 and reaching a 22-week high, we should prepare for heightened upside volatility as conflict threatens Middle Eastern energy infrastructure. Given that roughly 20% of global petroleum flows through the Strait of Hormuz, any sustained transit blockade could easily push prices toward $110. As we approach the upcoming US midterm elections on November 3, we expect heavy speculative buying to keep supply tightness priced in.
Since daily momentum indicators are currently overbought, buying directly at market highs carries a elevated risk of a short-term drop. Instead, we should look for long entries on shallow pullbacks toward the $95.00 to $98.50 breakout support zone. Using call options or vertical call spreads can also give us upside exposure while keeping our downside risk capped.
Positioning Strategies and Risk Controls
With prospective military actions on the horizon following the November midterms, option volatility premiums are likely to expand significantly. Historical data shows that acute geopolitical supply crises can add a $10 to $15 risk premium to crude prices within days. Position strategies like long straddles can help us profit from huge price swings regardless of whether supply drops further or headlines spark a sudden panic sell-off.
We must enforce strict stop-loss discipline to protect capital in case diplomatic talks unexpectedly calm the market. The 50-day Exponential Moving Average, currently sitting near $91.50, acts as our critical line in the sand for maintaining a medium-term bullish outlook. Monitoring weekly API and EIA inventory numbers alongside daily news will ensure our positions stay aligned with actual market supply.
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