WTI crude oil prices moved sharply, with May futures jumping above $115 before easing to near $112. Spot WTI traded near $104, down 0.2%, after a range between about $101 and $106.<\/p>\n
The gap between spot and front-month futures points to steep backwardation and a near-term delivery premium linked to a Tuesday deadline. WTI futures rose nearly 12% last Thursday, while spot prices stayed well below the futures level.<\/p>\n
Donald Trump said the US would target Iranian power plants and bridges by midnight Tuesday if the Strait of Hormuz is not reopened by 8 pm Eastern Time. Iran rejected the ultimatum and said the Strait would reopen only after reparations for war damage.<\/p>\n
The Strait has been largely closed to commercial shipping since late February, with an estimated 17 to 18 million barrels per day affected. A Pakistan-brokered 45-day ceasefire plan, passed via Pakistan, Egypt, and Turkey, was also rejected by Iran.<\/p>\n
US crude inventories rose by 5.5 million barrels for the week ending 27 March, and OPEC+ approved a 206K barrels-per-day output increase for April. Goldman Sachs put the risk premium at $14 to $18 per barrel.<\/p>\n
We remember the extreme volatility around this time last year, when the standoff with Iran over the Strait of Hormuz caused a massive spike in crude futures. The market went into extreme backwardation, with the May 2025 contract trading near $115 while spot prices struggled to hold $104. That memory of a $15 geopolitical risk premium appearing almost overnight should keep us cautious.<\/p>\n
Unlike the acute crisis in March 2025, today’s market is dealing with a slower grind of competing factors. While geopolitical tensions in the Middle East persist, they haven’t shut down a major transit route. Recent data from the Energy Information Administration (EIA) shows a surprise build in U.S. crude inventories of 2.7 million barrels, suggesting softer demand than anticipated.<\/p>\n
This inventory build contrasts with supply-side discipline, as OPEC+ has just agreed to extend its voluntary production cuts of 2.2 million barrels per day through the second quarter. This creates a tense balance where fundamental weakness is being propped up by managed supply cuts. WTI crude is currently trading around $85 a barrel, significantly lower than last year’s crisis peak but still elevated historically.<\/p>\n
Given this setup, outright directional bets are risky in the coming weeks. The memory of last year\u2019s sudden price explosion means any escalation in the Middle East could trigger a rapid rally, making short positions dangerous. Therefore, we should focus on options strategies to define our risk, such as buying call spreads to bet on a modest rise or purchasing puts to protect against a sudden drop if demand fears take over.<\/p>\n
The elevated implied volatility in options contracts reflects the market’s anxiety, but it is a price worth paying for protection. We can use strategies like a straddle or strangle if we anticipate a large price move but are unsure of the direction. This allows us to profit from the volatility itself, which seems to be the only certainty in this market.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" WTI surged as Hormuz tensions drove sharp backwardation; spot lagged futures, with inventories rising and OPEC+ boosting output.<\/p>\n","protected":false},"author":103,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-46722","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/46722","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=46722"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/46722\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=46722"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=46722"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=46722"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}