Donald Trump said the US had knocked out Iran’s navy and leaders, and that the US military is being used effectively. He also said the action aimed to remove “evil people”, and that the US would not leave until “the job is finished”, adding: “We do not want to return every two years.” He said 58 Iranian naval ships were destroyed. He also said an International Energy Agency decision to release oil from reserves will substantially reduce oil prices.

Market Moves And Price Response

In market moves, West Texas Intermediate was up 2.47% at $87.38 at the time of writing. It had retreated from over three-year highs of $113.28 reached earlier in the week. Looking back at the events of 2025, we saw how geopolitical conflict sent WTI crude over $113 a barrel before the IEA reserve release brought it back down. That intervention was a temporary fix for a market shocked by the destruction of significant naval assets in a critical region. The immediate price drop to the high $80s showed how sensitive the market was to supply-side announcements. Historically, strategic reserve releases provide only short-term relief, as we saw after the record 180 million barrel release in 2022 which saw prices initially cool before fundamentals took over again. The underlying problem of constrained supply and heightened risk in the Strait of Hormuz from last year’s conflict was never truly solved. Therefore, we must consider that the fundamental supply picture remains tight, with global spare capacity still hovering near a historically low 2.5 million barrels per day. Given the lingering tensions, the geopolitical risk premium baked into current oil prices is substantial and fragile. We see WTI trading today, March 12, 2026, in a nervous range around $85 per barrel, ready to react to any headline. This environment suggests that the extreme price volatility of 2025 could easily return with little warning.

Derivatives And Volatility Strategy

For derivative traders, this means options premiums are reflecting continued uncertainty, with the crude oil volatility index (OVX) holding firm around 35, well above pre-conflict norms. This elevated volatility points to a market that expects sharp price movements in either direction. Playing this volatility, rather than just direction, could be a key strategy in the coming weeks. We should consider strategies that benefit from large price swings, as the stability we see is likely deceptive. Purchasing long-dated strangles, which involves buying both an out-of-the-money call and put option, could position a portfolio to profit from a major price breakout. The memory of last year’s $25 swing in a single week is a powerful reminder of how quickly the market can move. The supply from Iran remains significantly hampered, and there is little indication that the nearly 60 destroyed ships have been replaced, impacting their export capabilities. This puts more pressure on other OPEC+ producers to manage a delicate balance, leaving the market highly vulnerable to any further disruption. With global oil demand projected by the IEA to grow by another 1.2 million barrels per day this year, the supply buffer is simply not there. Create your live VT Markets account and start trading now.

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