During Tuesday’s Asian session, WTI crude oil prices rose to $59.54 due to geopolitical tensions in Iran. The US closely monitors the situation following claims of Iranian security forces killing protesters.
US President Trump announced a 25% tariff on businesses trading with Iran. The backdrop of these tensions influences oil supply dynamics and impacts WTI prices, trading above one-month highs.
Potential Increase From Venezuela
Potential increased supply from Venezuela could limit WTI price gains. Trump stated that Venezuela’s interim government might supply 50 million barrels of high-quality oil to the US.
The API’s weekly crude oil stockpiles report is anticipated on Tuesday. A significant inventory draw may boost WTI prices by reflecting higher demand, whereas a larger-than-expected build could depress prices.
West Texas Intermediate (WTI) is a high-quality crude oil used as a market benchmark. Factors affecting WTI prices include supply and demand dynamics, geopolitical tensions, and OPEC decisions.
The American Petroleum Institute (API) and the Energy Information Agency (EIA) publish weekly inventory data impacting oil prices. OPEC and OPEC+ nations influence oil output decisions, affecting global prices.
Supply And Demand Dynamics
It is interesting to look back at how tensions in Iran were pushing WTI toward $60 a barrel around this time in 2025. Now, with WTI trading closer to $75, the focus has shifted from specific flashpoints to broader supply concerns. The market seems to have priced in a certain level of geopolitical risk, making supply and demand data more impactful for short-term moves.
We see a different supply picture today compared to the speculation about Venezuelan oil in 2025. OPEC+ has shown strong discipline, extending its 2.2 million barrel-per-day voluntary cuts into this quarter to keep a floor under prices. However, this is being offset by robust US production, which the Energy Information Administration confirmed set a new record high late last year.
On the demand side, the bullish case is less clear than it was during the post-pandemic recovery. We are closely watching economic indicators from China, which showed manufacturing activity contracted for a third straight month in December 2025. This persistent weakness in the world’s largest oil importer suggests global demand growth may not be strong enough to support prices much higher.
This creates a tense balance for traders in the coming weeks. The tight supply from OPEC+ is clashing directly with weakening demand signals, which suggests a period of heightened volatility rather than a clear trend. For this reason, we believe derivative strategies that profit from price swings, such as buying straddles or strangles on near-term contracts, could be more effective than taking a simple long or short position.
