Trump Warning And Early Asia Bounce
Earlier, Donald Trump warned Iran he would target bridges and energy sites if Hormuz was not reopened by Tuesday, 8 PM Eastern time (00:00 GMT). That warning had lifted prices in the early Asian session due to fears of retaliation against US interests in the Middle East. Crude is up about 50% since Iran closed the Strait of Hormuz in the first weeks of the war. Hormuz is a route for about one-fifth of global oil supply, and the closure tightened flows. OPEC and allies agreed to raise May output quotas by 206K barrels per day. The effect on prices was limited as the Hormuz closure and damage to Gulf oilfields may restrict extra supply. We remember how the hope of a peace deal in 2025 caused WTI to drop $5 in a single day, highlighting the market’s sensitivity to geopolitical news. That sudden de-escalation showed how quickly a war premium can evaporate from the price. Traders who were long above $105 learned a painful lesson in headline risk.How The 2025 Shock Still Shapes Positioning
That ceasefire in Iran eventually held, leading to the reopening of the Strait of Hormuz and a price stabilization in the low $90s by late 2025. Now, on April 6, 2026, the market dynamics are different, with WTI trading much lower, near $86 per barrel. The current price is supported not by active conflict, but by disciplined supply management and persistent underlying tensions. OPEC+ remains a key factor, continuing the coordinated production cuts that we have seen for the last two years, which are currently holding about 2 million barrels per day off the market. This creates a floor under prices that did not exist during the freefall of the de-escalation scare. Global demand also remains robust, with the EIA forecasting a steady consumption increase of 1.4 million barrels per day this year, largely driven by Asian economies. The lesson from 2025 is that volatility can spike on any news of either escalation or de-escalation in the Middle East or Ukraine. Given the persistent, low-level conflicts disrupting shipping in the Red Sea, the risk of a sudden supply shock remains. Therefore, holding some long-dated, out-of-the-money call options could be a prudent way to hedge against an unexpected flare-up. For those looking to generate income, the market’s current range suggests selling puts below key technical levels may be effective. With OPEC+ defending prices, a strategy of selling puts with a strike price around $80 could yield consistent premiums. This reflects a belief that global producers will not let prices fall significantly below their current targets. We should also watch weekly inventory reports closely, as they are a real-time indicator of demand. Last week’s EIA report showed a surprise build in crude inventories of 2.7 million barrels, which capped the rally and kept prices below the $90 resistance level. This data indicates that while the market is tight, supply is sufficient to meet immediate demand, limiting runaway price action for now. Create your live VT Markets account and start trading now.
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