Supply And Shipping Uncertainty
The planned reserve release was described as a short-term measure that may not cover an estimated 25mn barrels per day loss of output linked to the conflict. Ongoing disruption to private-sector oil and gas shipments was cited as a risk even if fighting ends quickly. Longer-term measures, such as broader agreements or more structured ship escort arrangements, were referenced as possible ways to reduce worries about transport safety and continuity. The article notes it was produced using an AI tool and reviewed by an editor. The sustained price of WTI crude above $90 a barrel shows the market is ignoring short-term fixes like strategic reserve releases. The core problem remains the significant supply risk from the ongoing conflict impacting the Strait of Hormuz. We see that confidence in a quick resolution is extremely low among traders. February 2026 data from the IEA confirms a persistent global supply deficit of over 3 million barrels per day, justifying the current price strength. This deficit directly contradicts early assurances we heard back in late 2025 that the conflict’s impact would be minimal. Consequently, the market is pricing in a prolonged period of undersupply.Positioning For Continued Strength
Given this outlook, we believe positioning for continued price strength through long call options on WTI futures is a primary strategy. Implied volatility is elevated, with the CBOE’s OVX index recently pushing past 55, a level not seen since the initial supply scares of 2025. This suggests options will be expensive, but the potential for sharp upward moves remains significant. The market structure has shifted into steep backwardation, where front-month contracts are much more expensive than later-dated ones. This is very similar to the market reaction we observed following the 2022 invasion of Ukraine, indicating an acute fear of immediate shortages. Traders could exploit this by using calendar spreads to bet on the persistence of this short-term panic. The risk is not just theoretical; it’s showing up in logistics costs. Just last week, we saw reports that shipping insurance premiums for tankers in the Gulf doubled overnight following another security incident. This directly impacts the landed cost of crude and reinforces the idea that supply chains will remain fragile for the foreseeable future. Create your live VT Markets account and start trading now.
Start trading now – Click here to create your real VT Markets account
