President Trump has suggested possible sanctions on Russian oil, which could take effect within ten days. The proposed tariffs would target countries that continue buying Russian oil, and these tariffs are likely to be significant. This news has caused crude oil prices to rise. The price has exceeded the 200-day moving average of $67.97.

Crude Oil Price Surge

Trump’s announcement led prices to peak at an intraday high of $69.41, nearing the resistance level of $69.61 seen on July 14. By the end of trading, crude oil was priced at $69.21, marking an increase of $2.50 or 3.75%. Crude oil prices are climbing due to new threats of tighter sanctions on Russian energy exports. The market is reacting to reports of the EU considering stricter enforcement of its price cap. There is growing concern over potential supply disruptions as we head into the high-demand winter season. West Texas Intermediate (WTI) crude has surpassed the crucial $85 per barrel mark, closing around $85.15 today. This rise clears the 50-day moving average, which is a positive sign for the short term. Russian seaborne exports remain around 3.4 million barrels per day, and new measures could affect this volume.

Volatility and Risk Management

For derivative traders, expect higher volatility in the coming weeks. The CBOE Crude Oil Volatility Index (OVX) has already jumped to 38, indicating larger price fluctuations. We are considering buying call options to take advantage of potential price increases or using call spreads to manage entry costs. We remember the price spike to over $120 a barrel in 2022 when sanctions were first widely implemented. While we don’t expect such a drastic increase again, it highlights how quickly prices can respond to supply concerns. The market remembers this event, which is fueling current buying pressure. Traders with long positions in futures contracts should pay attention to their risk management strategies. Using trailing stops could be a wise way to secure profits if the geopolitical situation improves unexpectedly. Staying flexible is important, as headlines are likely to influence trading for the rest of the quarter. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now