US President Donald Trump is due to address the nation at 01:00 GMT on Thursday with an update on the war with Iran, CNN reported. It will be his first major national address on the conflict since the first joint US-Israeli strikes on Iran in late February. A White House official said Trump is expected to refer to US military outcomes and restate a two- to three-week timeline to conclude the operation. At the time of writing, West Texas Intermediate (WTI) was down 3.75% on the day at $93.82. WTI is a type of crude oil traded globally, and is one of three major benchmarks alongside Brent and Dubai Crude. It is produced in the United States and distributed via the Cushing hub. WTI prices are mainly driven by supply and demand, including global growth, wars, sanctions, and OPEC decisions. The US Dollar also affects pricing because oil is largely traded in US Dollars. Weekly inventory reports from the American Petroleum Institute (API) and the Energy Information Agency (EIA) can move prices. Their results are within 1% of each other 75% of the time, and the EIA is a government agency. OPEC has 12 oil-producing member nations that set production quotas at twice-yearly meetings. OPEC+ includes ten additional non-OPEC members, including Russia. We remember how the market reacted last year during the conflict with Iran. When the president’s address in early March 2025 signaled an end to the operation, WTI crude futures sold off sharply, falling below $94 a barrel. This demonstrates how quickly a geopolitical risk premium can evaporate from the market on news of de-escalation. Today, with WTI trading around $85 a barrel, we are facing a different set of pressures, including renewed tensions around the Strait of Hormuz. Despite these headlines, the CBOE Crude Oil Volatility Index (OVX) is hovering near 35, a significant drop from the highs over 50 we saw during the conflict in 2025. This suggests the market might be underpricing the risk of a potential supply disruption in the coming weeks. Adding to this complex picture, the latest Energy Information Administration (EIA) report showed an unexpected build in US crude inventories of 2.1 million barrels. This points to potentially weaker consumer demand, which is acting as a strong counterforce to the geopolitical fears. We must therefore be prepared for price action to be driven by conflicting inventory and political headlines. Given the current low volatility, traders should consider buying options to position for a significant price move. Purchasing long-dated call options allows for capitalizing on a potential price spike from Mideast tensions, while put options could serve as a hedge against demand weakness confirmed by future inventory reports. A long straddle or strangle could be an effective way to trade the expected rise in volatility itself. The upcoming OPEC+ meeting is another critical event we are monitoring. Last year, following the 2025 conflict, the group held production steady to see how the market would stabilize. Any indication this month that they are considering production cuts to offset weak global growth data could override bearish inventory numbers and send prices higher.

Start trading now – Click here to create your real VT Markets account