WTI, the US crude oil benchmark, traded near $88.20 in early European hours on Thursday. The price moved lower on optimism linked to a ceasefire between the US and Iran.
The US and Iran have held indirect talks to extend a two-week ceasefire beyond its April 22 expiry. Donald Trump said the U.S.-Israeli war on Iran was “close to over”, and the White House said more in-person talks were likely to take place in Pakistan again.
Expectations of further talks reduced concern about disruption to energy supplies, which weighed on WTI. The IEA said on Tuesday that resuming flows through the Strait of Hormuz was the single most important factor for easing pressure on supplies, prices and the global economy.
Markets also assessed the effect of a US blockade aimed at Iranian ports on global supply. Washington said several vessels turned back in the first 24 hours, while transit through non-Iranian ports continued.
We are looking at a very different market than in April of 2025 when hopes for a US-Iran ceasefire temporarily pushed prices down from the $88 level. That period of volatility taught us how quickly geopolitical news can sway sentiment. Today, with WTI closer to $82, the focus has shifted away from that specific conflict.
Current market drivers are now dominated by supply management from OPEC+ and mixed demand signals from Asia. Last week’s surprise 2.5 million barrel build in US crude inventories, reported by the EIA, adds to bearish sentiment. This suggests a cautious stance, with traders potentially looking at buying puts to hedge against a further slide below $80.
We recall how threats to the Strait of Hormuz in 2025 caused implied volatility to spike, making options expensive. While current tensions in the Red Sea are keeping volatility elevated, it has not reached those peaks. This environment could favor strategies like selling covered calls against long positions to generate income while waiting for a clearer market direction.
Looking ahead, the upcoming OPEC+ technical meeting on May 1st will be a critical event for price direction. With the May WTI contracts expiring next week, traders should be mindful of increased price swings. Any unexpected economic data from China or the US could easily shift the delicate balance between supply concerns and demand fears.
