WTI traded near $94.45 on Friday after reaching $97.00 on Thursday. It eased from the highs but was still set for a nearly 7% weekly rise.
Prices rose this week amid ongoing conflict in the Middle East and disruption linked to the Strait of Hormuz. Reports included ship seizures, footage of a commando boarding a cargo vessel on Thursday, and a stated $1 per barrel toll for tankers crossing the waterway.
WTI Supply Demand And Inventory Snapshot
In the US, the Energy Information Administration reported commercial crude stocks rose by 1.9 million barrels in the week of 17 April. This contrasted with expectations for a 1.2 million barrel drawdown and put downward pressure on WTI.
WTI stands for West Texas Intermediate, one of three main crude types alongside Brent and Dubai. It is a light, sweet crude sourced in the US and distributed via the Cushing hub, and its price is widely used as a market benchmark.
WTI prices mainly move with supply and demand, including global growth, political disruption, sanctions, OPEC output decisions, and the US dollar. Weekly inventory updates from the API and EIA also affect prices, with their results typically within 1% of each other 75% of the time.
With WTI oil consolidating near $94.50, we are seeing a classic conflict between bearish fundamental data and bullish geopolitical risk. The nearly 7% gain this week is driven entirely by the blockade of the Strait of Hormuz, a critical chokepoint for global supply. This tension is creating significant uncertainty, which is an environment where derivative strategies can be particularly useful.
Options Strategy In Elevated Volatility
The market is correctly placing more weight on the potential for a full-blown supply disruption than on short-term inventory data. Historically, about 20% of the world’s total oil consumption passes through the Strait of Hormuz, so any prolonged closure will far outweigh the impact of a 1.9 million barrel build in US stocks. We must therefore treat the geopolitical news as the primary driver of price action in the coming weeks.
As we often discussed back in 2025, situations like this mirror the early days of the conflict in Ukraine in 2022, which saw oil volatility, measured by the OVX index, spike over 50%. This tells us that implied volatility is likely to remain elevated, making option premiums more expensive but also signaling the market’s expectation of large price swings. Traders should be prepared for prices to move several dollars in either direction on any single headline.
Given this heightened volatility, we are seeing increased interest in strategies that can profit from sharp movements, regardless of direction. Purchasing long straddles, which involve buying both a call and a put option with the same strike price and expiry, is a textbook play for this type of environment. Alternatively, those who believe the conflict will escalate may favor buying call options or establishing bull call spreads to limit upfront cost.
However, we must also consider the demand side of the equation, which could act as a cap on prices. Recent manufacturing PMI data out of China for March 2026 came in slightly below expectations at 49.8, indicating a slight contraction and raising concerns about demand from the world’s largest oil importer. This, combined with rising US inventories, forms the basis of the bearish case if tensions in the Middle East were to suddenly ease.
For now, the key price levels to watch are the recent high of $97.00 as a point of resistance and the $90.00 level as psychological support. The behavior of WTI crude around these marks will provide crucial signals for setting strike prices on any new option positions. We anticipate that geopolitical headlines, not weekly inventory reports, will be the catalyst for the next significant move.
