WTI rose to about $89.00 in the Asian session after falling to a three-week low of $84.86, having dipped below $85.00. The move followed a US military announcement of a total blockade of the Strait of Hormuz.
WTI had dropped nearly 8% over the previous two days amid reports of renewed US-Iran contacts. President Trump said negotiations might restart within the next two days.
On charts, WTI remains in a bearish bias within a horizontal channel, with support near $84.50. The RSI is recovering from oversold levels but stays below 50, while the MACD shows an expanding negative histogram.
A break below $84.46 would point to targets near $80.00 and the March 10 low around $76.00. Resistance levels include the weekly high at $98.10, the April 5 and 7 highs around $106.50, and the March 9 high at $113.28.
WTI is a US-sourced crude benchmark traded via the Cushing hub; it is classed as light and sweet. Its price is driven by supply and demand, geopolitics, sanctions, OPEC decisions, and the US Dollar.
Weekly inventory reports from API (Tuesday) and EIA (Wednesday) can move prices. Their results are within 1% of each other 75% of the time, and EIA data is viewed as more reliable.
The sudden US blockade of the Strait of Hormuz has completely changed market dynamics, injecting massive volatility. The immediate jump to $89.00 has reversed the recent downtrend that was based on hopes of peace talks. We must now prepare for a period of extreme price swings as geopolitical tensions override typical supply and demand factors.
We need to consider that about 21 million barrels of oil, or 20% of global daily supply, pass through this strait. A full, sustained blockade would be a far more severe disruption than the temporary tanker tensions we saw back in 2019. This action could create a supply shock not seen in decades if it is not resolved quickly.
Given the uncertainty, we should focus on derivative strategies that benefit from this new high-volatility environment. Buying long straddles or strangles would allow us to profit from a large price move in either direction, whether it is a surge past $100 or a collapse if the blockade is lifted. Implied volatility on near-term WTI options has already jumped over 30% in Asian trading, signaling market anticipation of a significant event.
However, we cannot discount the possibility of a rapid de-escalation, especially with the President’s comments about talks resuming. The market’s 8% drop earlier this week shows how quickly prices can fall on any hint of a diplomatic solution. It would be wise to hedge any bullish positions with out-of-the-money puts near the $80 strike price as insurance against a sudden reversal.
While fundamentals are in control, the technical support around $84.50 remains a key level to watch. The upcoming EIA inventory report will also be critical; a significant drop in US stockpiles could easily push prices toward the weekly high of $98.10. We remember how a series of large inventory draws in the third quarter of 2025 helped sustain a rally, a pattern that could repeat now.
