WTI traded near $102.40 in early European hours on Friday, down below $102.50. The fall followed a firmer US Dollar, while Middle East conflict risks limited further losses.<\/p>\n
The Federal Reserve kept the federal funds rate at 3.5% to 3.75% at its April meeting on Wednesday. Jerome Powell said near-term inflation expectations were rising and that he would stay on the Board of Governors for an indefinite period after his chairmanship ends.<\/p>\n
The United Arab Emirates is set to leave OPEC on 1 May. The decision followed weeks of missile and drone attacks on the UAE that were attributed to Iran, which is also an OPEC member.<\/p>\n
Oil supply concerns continued as the Strait of Hormuz remained closed. Reuters said on Wednesday that Donald Trump was due to be briefed on Thursday on plans for military strikes on Iran aimed at pushing it back to talks on its nuclear programme.<\/p>\n
An Iranian official said on Thursday that Iran would respond with \u201clong and painful strikes\u201d on US positions if attacks resumed. These developments increased the risk of supply disruption, which supported prices despite the stronger Dollar.<\/p>\n
We can see how a year ago, the market was gripped by fears of a full-blown conflict with Iran, holding oil prices well above $102 per barrel. The closure of the Strait of Hormuz and the UAE’s exit from OPEC created a significant risk premium that supported prices. This was balanced against a strong US dollar as the Federal Reserve signaled its tough stance on inflation.<\/p>\n
Today, the situation has changed dramatically, with WTI trading much lower, closer to $79 a barrel. The acute fear of a major supply disruption from an Iran war has subsided, even with other tensions remaining in the region. The Fed’s policy has been a more dominant factor, with interest rates now sitting higher in the 5.25% to 5.50% range, which has continued to support the dollar.<\/p>\n
The significant war premium that we saw in the market during 2025 has largely disappeared from the price. This means we should shift our focus from moment-to-moment geopolitical headlines to more fundamental economic data. The market is now less concerned with military briefings and more interested in signs of global demand and inventory levels.<\/p>\n
For instance, we are paying close attention to weekly supply figures, which currently show comfortable inventory levels in the US. The latest EIA report indicated a build in crude oil inventories of 2.7 million barrels, easing concerns about immediate supply tightness. This kind of data is now the primary driver of short-term price movements.<\/p>\n
Given that the intense fear has left the market, implied volatility in oil options is lower than it was a year ago. This makes it a good time to consider buying options, as they are relatively cheaper for hedging or speculating on price swings. We should look at purchasing puts to protect against downside risks driven by a slowing economy.<\/p>\n
Moving forward, the main variable for us is not conflict, but central bank policy and its impact on economic growth. We are watching inflation reports and labor market data to anticipate when the Fed might begin cutting rates, which would likely weaken the dollar and support oil prices. Therefore, structuring trades around key economic data releases will be more effective than reacting to Middle East news flashes.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" WTI slipped to $102.40 as dollar strengthened; Middle East tensions and Hormuz closure limited losses, supporting prices.<\/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-49233","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t