Insights 
VT 
The price of West Texas Intermediate (WTI) Oil increased over 2%, trading around $75.50 per barrel. This rise was prompted by US military strikes on three Iranian nuclear facilities, escalating supply concerns.
US President Donald Trump stated these strikes targeted Fordow, Natanz, and Isfahan in coordination with an Israeli assault. The situation with Iran has the potential to worsen, with Tehran vowing to retaliate.
Impact Of Potential Closure Of Strait Of Hormuz
Traders anticipate further price increases amid fears that Iran may close the Strait of Hormuz, a critical passage for roughly 20% of global crude supply. Despite alternative pipeline routes, substantial crude volumes might remain unexported if the strait becomes inaccessible.
WTI Oil, sourced in the US and distributed via the Cushing hub, is a key benchmark in the oil market. Factors such as supply-demand dynamics, political instability, and global economic conditions influence WTI Oil price.
Weekly Oil inventory reports by the API and EIA also impact prices, as they reflect supply-demand fluctuations. Decisions by OPEC, which includes major Oil-producing countries, are another pivotal factor in WTI Oil pricing.
The recent upward movement in WTI crude, surpassing 2% and settling around $75.50 per barrel, appears directly linked to heightened tensions in the Middle East. The origin of this tension lies in coordinated military actions led by the United States and Israel, targeting Iranian nuclear sites in Isfahan, Natanz, and Fordow. President Trump confirmed the strikes and framed them as a response with strategic alignment, which has raised immediate concerns about oil supply security.
Iran’s reaction—denouncing the attacks and vowing retaliation—has introduced a credible threat to maritime logistics in the region. In particular, the Strait of Hormuz is now in focus. It remains a narrow but vital route through which close to a fifth of the world’s crude oil passes. Although pipeline infrastructure exists as a partial alternative, the overall export capacity outside this maritime chokepoint cannot easily absorb a closure. As a result, supply chain imbalance is now being re-priced into the market.
Geopolitical Influence On Oil Pricing
We have seen this pattern before—when geopolitical events unfold in energy-sensitive regions, derivatives markets register volatility promptly. For the coming sessions, contract holders should pay close attention to risk premiums embedded in near-term oil calendars. Increased backwardation indicates short supply concerns. This trend, if it persists over the next week, may reward positioning that captures front-end tightness.
An important element often overlooked during geopolitical events is the reaction time of upstream supply chains. Even assuming no prolonged physical disruptions, forward-looking sentiment tends to remain elevated until political stability resumes. This is not just sentiment—it affects refining margins, transport premiums, and ultimately how traders construct strategies on fuel derivatives and energy-linked indices.
Weekly inventory figures from the API and EIA may offer temporary indications of domestic balances, but they are unlikely to overshadow the broader geopolitical trigger in this context. Last week’s unexpected draw on commercial stocks was largely dismissed, given that traders are re-prioritising headline risk over short-term supply corrections.
On the policy front, OPEC’s stance will also be monitored more closely. Their collective production quotas, especially from Gulf-member states, might be reassessed if regional shipping begins to face new constraints or insurance premiums spike. It’s plausible they may signal readiness to offset global imbalances—though any such adjustment could lag behind spot market dislocations.
Given that WTI is settled at the Cushing delivery point, attention should also be paid to how much Gulf Coast crude is rerouted inland. This could widen the Brent-WTI spread again, potentially opening arbitrage opportunities or basis-driven hedging decisions. Watch for any marked build-up in Gulf inventories that may ultimately compress differentials.
As positions are recalibrated through options and swaps, we find that volatility pricing is already reflecting higher forward uncertainty. Dealers are now reassessing delta hedging costs, especially for near-date crude options which are experiencing premium inflation. There’s also a noticeable increase in AI-generated alerts on downstream refinery optimisation as firms digest this spike.
Keep monitoring not just traditional supply-demand metrics, but also freight rates, insurance costs, and geopolitical risk indices—data that are increasingly being fed into quant-driven models. Many of these inputs can shift the positioning on ICE and CME-linked energy contracts by institutional players, affecting liquidity throughout the curve.
