West Texas Intermediate (WTI) crude oil prices dropped to around $61.20 during early trading in Asia on Friday. This fall is mainly due to easing tensions in the Middle East, especially the ceasefire between Israel and Hamas in Gaza. The ceasefire agreement includes a stop to fighting, some withdrawal of Israeli forces, and the release of hostages held by Hamas. With tensions easing in a region that provides a third of the world’s crude oil, WTI prices are under downward pressure.

US Government Shutdown

The US government has now been shut down for ten days, which is affecting economic growth and oil demand. President Trump’s strategy to use the shutdown as a way to cut programs may extend this deadlock. On the other hand, uncertainty from the Russia-Ukraine conflict could support oil prices. Online trading is reflecting concerns over possible new sanctions on Russian exports, which could impact global oil supply. WTI is a high-quality crude oil known for its low sulfur content. Its price is greatly affected by global supply and demand, political events, and OPEC decisions. Data from the American Petroleum Institute and the Energy Information Administration, as well as the value of the US dollar, also influence WTI prices. OPEC’s production decisions are crucial for oil prices around the world. Today’s market is very different from the past, when peace developments in the Middle East caused WTI prices to fall below $61.50. As of October 10, 2025, crude is trading close to $88 a barrel due to renewed geopolitical risk. Tensions in the Strait of Hormuz are adding a significant risk premium to the price.

Market Volatility

Increased geopolitical uncertainty is causing more volatility in the oil markets. Implied volatility on front-month options has risen to over 40%, a level we haven’t seen since the supply shocks of early 2024. Traders may want to consider buying call options or bull call spreads to profit while keeping their risk in check. The demand picture is more uncertain, creating mixed signals for prices. The latest US jobs report from September 2025 shows a slowdown in hiring. Recent global manufacturing PMI data suggests sluggish economic growth, and the longer period of high interest rates is weighing on global energy demand. However, recent supply data is providing strong support for prices. The Energy Information Administration (EIA) reported a surprising decrease in crude inventory of 4.2 million barrels this past Wednesday, significantly surpassing analyst expectations of a small increase. This, coupled with OPEC+ maintaining its production cuts through the end of the year, indicates a tight market. Given these conflicting signals—strong supply support against weak demand—we expect traders to prepare for sharp price movements. A strategy like a long strangle, which involves buying an out-of-the-money call and put, could be a good choice. This allows traders to benefit from significant price changes in either direction in the coming weeks. Create your live VT Markets account and start trading now.

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