WTI traded near $98.25 on Tuesday, up 0.21% on the day, but below earlier weekly highs. Trading stayed cautious ahead of renewed US-Iran talks aimed at extending a ceasefire as it nears expiry.
Reports said Iran plans to send a delegation to Islamabad for a second round of talks with Washington. US President Donald Trump said Vice President JD Vance could travel to Pakistan to resume negotiations.
Supply concerns persisted in the Strait of Hormuz, which handles about 20% of global Oil trade and nearly 30% of the world’s Gas production. Military tension and maritime incidents have slowed shipping in the area.
The International Energy Agency’s Fatih Birol said the Iran conflict has triggered “the worst energy crisis in history”, and compared it with the Oil crises of 1973, 1979, and 2022. Markets also awaited American Petroleum Institute data, with consensus expecting a draw of about 1 million barrels for the week ending April 17, after a 6.1 million-barrel rise the prior week.
WTI is a US crude benchmark, sourced in the United States and distributed via the Cushing hub. Its price is driven by supply and demand, OPEC decisions, the US Dollar, and weekly API and EIA inventory reports, which are within 1% of each other 75% of the time.
The current price of WTI crude around $98.25 is heavily influenced by geopolitical tension, creating a volatile environment. We are seeing a direct clash between bearish diplomatic hopes and bullish supply realities in the Strait of Hormuz. This uncertainty suggests that large price swings are more likely than a stable trend in the coming weeks.
The warnings about this being the “worst energy crisis in history” should be taken seriously, as it echoes the sentiment from early 2022 when prices surged above $120 a barrel. For traders who believe the US-Iran negotiations will fail, buying out-of-the-money call options is a way to position for a potential spike towards those previous highs while limiting downside risk. A failure in talks could quickly erase any optimism priced into the market.
Conversely, the possibility of a diplomatic breakthrough presents a significant downside risk for oil prices. We can look back to the period leading up to the 2015 JCPOA deal, where the prospect of returning Iranian barrels to the market weighed on prices for months. Traders anticipating a successful outcome could use put options to target a fall back toward the $85-$90 range.
Given the binary nature of the outcome, trying to predict the direction is extremely risky. A more prudent approach may be to trade the volatility itself through options strategies like a long straddle, which profits from a sharp price move in either direction. The CBOE Crude Oil Volatility Index (OVX) is likely elevated in this environment, reflecting market anxiety similar to the spikes we saw during banking fears in 2025.
We must also watch the upcoming weekly inventory data closely, as it provides a fundamental check on the market balance. While consensus points to a 1-million-barrel draw, recent EIA reports have been unpredictable, with a surprise build of 2.7 million barrels just two weeks ago causing a sharp intraday drop. A significant build this week could compound any positive diplomatic news and accelerate a price decline.
Finally, we have to consider the role of OPEC+, which has maintained production discipline throughout the past year to establish a floor for prices. Their current quotas provide a buffer, suggesting that even with a US-Iran deal, prices may find support near the low $80s. However, any sign that the group might increase production to compete with new Iranian supply would remove this safety net.
