WTI reversed early losses on Monday to reach a two-week high, trading around $93.50, up 2.75% on the day after touching an intraday low of $89.02. The move came as markets reassessed claims of an immediate Russia-Ukraine \u201cenergy ceasefire\u201d, announced on Sunday, which had initially weighed on prices. Separately, earlier comments said Russia would supply more than 300,000 tonnes of diesel\u2014equivalent to about 2.25 million barrels\u2014to US and global markets, with further cargoes planned, but the relief proved short-lived.<\/p>\n\n
Doubts resurfaced after Ukraine reported six strikes on domestic energy facilities, while Russia said contacts were ongoing. Geopolitical risk in the Middle East also underpinned crude after weekend Houthi attacks on Riyadh\u2019s international airport, alongside fighting near Bab el-Mandeb. Iran\u2019s IRGC reported a third oil supertanker hitting a naval mine in the Strait of Hormuz over two days, after disabling navigation and attempting to leave despite warnings. On demand, OPEC now expects 2026 oil demand growth of 400,000 barrels per day, down from 1.4 million forecast at the start of the year.<\/p>\n\n
We should prepare for heightened volatility in the coming weeks as energy markets grapple with escalating geopolitical supply risks. With crude pushing past $93 per barrel following renewed disruptions near key maritime chokepoints, purchasing call options offers a defined-risk approach to capture potential price spikes. Historical events, such as the 2019 attacks on Saudi processing facilities that drove crude up by over 14% in a single day, show how rapidly energy markets can reprice during severe supply threats.<\/p>\n\n
While geopolitical headlines favor a bullish bias, we must also hedge against underlying demand weakness. OPEC’s dramatic reduction of its 2026 demand growth forecast down to just 400,000 barrels per day indicates that global consumption might struggle to support sustained high prices. Utilizing options collar strategies or applying disciplined stop-loss orders will help protect our derivative positions against sudden sell-offs if diplomatic progress resumes.<\/p>\n\n
We recommend tracking weekly inventory reports from government and industry bodies to see if shipping bottlenecks are causing true physical market shortages. Historically, when official U.S. EIA crude inventories fall well below their five-year average during geopolitical crises, oil futures experience sustained bullish momentum. Verifying that price increases are backed by actual inventory draws gives us greater confidence when taking long positions.<\/p>\n\n
Because elevated market volatility makes plain options more expensive, we can use vertical call spreads to reduce initial premium costs while maintaining exposure to the upside. This strategy lets us target higher price levels, such as the $95 to $100 range, without taking on excessive risk from sudden policy changes. Maintaining short-term derivative positions will allow us to stay agile as markets continuously adjust to shifting supply news.<\/p>\n\n\n\n