WTI fell more than 10% on Wednesday after a temporary ceasefire agreement between the United States and Iran reduced price support linked to conflict risk. WTI traded near $89.50 per barrel after hitting an intraday low near $86, its lowest level since 25 March. <\/p>\n
US President Donald Trump said the US would suspend attacks on Iran for two weeks if Tehran ensures the full reopening of the Strait of Hormuz. Iran indicated safe transit through the route could be maintained during this period. <\/p>\n
Prices later stabilised, with reports of airstrikes between Israel and Lebanon and warnings from Iranian officials that Iran could withdraw from the ceasefire if attacks continue. The Financial Times also reported an attack on Saudi Arabia\u2019s East-West pipeline, which moves crude from the Gulf to the Red Sea for export. <\/p>\n
Attention is on the ceasefire\u2019s durability, the Strait of Hormuz, and US-Iran talks due later this week. In US data, the EIA reported crude inventories rose by 3.081 million barrels, versus 5.451 million the prior week and above expectations for a 0.7 million build. <\/p>\n
WTI is a US crude benchmark traded via the Cushing hub and is classed as light and sweet. Its price is driven by supply and demand, political disruption, OPEC decisions, the US Dollar, and weekly inventory data from API and EIA.<\/p>\n
The sharp 10% drop in WTI prices is a direct result of the temporary US-Iran ceasefire, which removed the immediate war premium from the market. We see this as a classic “sell the news” event, but the underlying tensions that drove prices up remain incredibly high. The oil volatility index (OVX) has surged to over 55, its highest point in over a year, signaling that the market is bracing for more significant price swings.<\/p>\n
With the threat of a wider conflict paused, we believe attention will shift back to weak fundamentals. The recent EIA report confirmed a 3 million barrel build in US crude stocks, well above expectations and pointing to soft demand. If the ceasefire holds, the market may re-focus on stubborn US inflation data and the prospect of the Federal Reserve keeping rates higher for longer, which would further dampen the outlook for oil.<\/p>\n
However, we must recognize the ceasefire is incredibly fragile and is only scheduled to last for two weeks. Continued Israeli action in the region or any disruption to shipping through the Strait of Hormuz could cause the war premium to return instantly, sending prices spiking back toward $100 per barrel. Therefore, buying long-dated call options could be a prudent way to position for a potential flare-up while clearly defining the maximum risk.<\/p>\n
Given the high probability of a significant price move in either direction, strategies like a long straddle, which profits from a large move up or down, may be appropriate. This approach benefits from the extreme uncertainty, regardless of whether the ceasefire holds or breaks down violently. Looking back at the price action in 2025, we saw how sensitive the market was to OPEC+ production announcements, and a similar level of headline-driven volatility should be expected now.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" WTI plunged over 10% after US-Iran ceasefire eased risks; prices steadied amid new strikes, pipeline attack concerns.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-44465","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/44465","targetHints":{"allow":["GET","POST","PUT","PATCH","DELETE"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=44465"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/44465\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=44465"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=44465"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=44465"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}