WTI crude saw sharp two-way swings on Thursday as US-Iran developments shifted sentiment. The contract was little changed around $88 a barrel at the time of writing, after rising to an intraday high of $91.27, then sliding as the market weighed reports of renewed conflict against talk of diplomacy.<\/p>\n
Prices initially climbed following reports of attacks in the Middle East, including US strikes on Iranian military sites and Iran\u2019s claim of targeting a US airbase in the Gulf. The move reversed after Axios reported a preliminary US-Iran accord, which pushed WTI down to an intraday low near $86.28. The report described a 60-day memorandum of understanding to extend the current truce, pending final approval from President Donald Trump.<\/p>\n
Outstanding issues were described as unresolved, including Iran\u2019s nuclear programme and control of the Strait of Hormuz. Separately, the US Treasury announced new Iran-related sanctions on the newly formed Persian Gulf Strait Authority, while Treasury Secretary Scott Bessent said the US would not accept a tolling system in Hormuz and warned that partners participating in such tolling would be penalised.<\/p>\n
The market is clearly caught between headlines of conflict and whispers of a truce. We see WTI crude trading in a news-driven range between roughly $86 and $91 per barrel. This extreme sensitivity means high volatility will be our primary focus in the weeks ahead.<\/p>\n
Given the potential for sharp price moves on any news out of Washington or Tehran, we are looking at options strategies to manage risk. Recent data shows 30-day implied volatility on WTI options has jumped to over 45%, a level we have not seen since the regional flare-ups earlier this year. This setup is ideal for strategies that profit from large price swings, regardless of direction.<\/p>\n
This situation is reminiscent of the summer of 2019 when tanker attacks near the Strait of Hormuz caused sharp but short-lived price spikes. Back then, prices rallied on fear but quickly faded when crude flows were not significantly disrupted. We must be prepared for a similar pattern where rumors and reality can pull the market in opposite directions.<\/p>\n
It is important to remember the market\u2019s tight fundamentals are preventing a larger price collapse on the truce news. The latest EIA report showed global crude inventories are 5% below their five-year average, providing a firm floor under prices. Any real supply disruption from the Strait of Hormuz, through which about 20% of the world’s oil passes, would have an outsized impact.<\/p>\n
Our immediate focus will be on any confirmation regarding the 60-day memorandum of understanding and its final approval. Until we have clarity, we believe establishing a long straddle, which involves buying both a call and a put option, is a prudent way to position for a breakout. This allows us to profit whether the deal collapses and prices surge, or if it is confirmed and prices fall.<\/p>\n","protected":false},"excerpt":{"rendered":"
WTI swung between $86-$91 as US-Iran conflict and diplomacy headlines drove volatility; traders eye options strategies.<\/p>\n","protected":false},"author":103,"featured_media":41759,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[108,66,20,85,97],"class_list":["post-54197","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates","tag-middle-east","tag-oil","tag-trading-strategies","tag-united-states","tag-volatility"],"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