WTI Oil prices reached a seven-week high of $60.50 on Tuesday, driven by fears of supply disruptions from Iran. This rise follows a four-day surge, with prices increasing over $4 per barrel due to unrest in Iran that has led to more than 650 deaths. US President Donald Trump announced a 25% extra tariff on imports from countries trading with Iran and hinted at tough measures against Iran for its handling of protests. Meanwhile, the expected return of Venezuelan oil exports could help relieve some price pressure.

Venezuelan Oil Exports

Trafigura and Vitol have agreed to assist in selling Venezuelan oil at the request of the US government. A vessel carrying this oil could be loaded as soon as this week. WTI Oil, known for its quality, is a key benchmark in the global market, sourced in the US. Political instability and OPEC decisions greatly influence its prices. Weekly inventory reports from the API and EIA typically show supply and demand aligning with a 1% difference. OPEC’s production quotas play a crucial role in determining WTI Oil prices; reductions lead to price hikes, while increases can cause prices to fall. OPEC+ includes non-OPEC members, impacting global oil trends significantly. Currently, WTI crude is trading around $85 a barrel, a stark contrast to last year’s $60 during the Iranian unrest. The current bullish trend stems from renewed tensions in the Strait of Hormuz, highlighting how geopolitical issues can quickly drive prices up. Traders should brace for potential volatility, as the current situation seems more delicate than last year’s internal unrest.

Energy Information Administration Data

This price pressure is backed by recent data from the Energy Information Administration (EIA), which revealed an unexpected drop in crude inventories of 2.1 million barrels for the week ending January 9th, 2026. This suggests that demand is currently exceeding supply, tightening the market more than analysts expected. We should pay close attention to the upcoming inventory reports, as a significant draw could push prices toward $90. Additionally, the latest OPEC+ meeting decided to maintain current production cuts, indicating some concern about global demand strength. Despite positive economic signs in the U.S., recent PMI data from China shows manufacturing is slowing down, creating mixed signals for future oil consumption. This uncertainty complicates the outlook. For derivative traders, buying out-of-the-money call options could be a wise move to hedge against sudden tensions in the Gulf. This strategy provides exposure to significant price increases if supply is disrupted, while capping potential losses to the premium paid. It allows for speculation on worsening conflict in the coming weeks without substantial risk. Given the possibility of either significant escalations or de-escalating tensions due to diplomatic efforts, a long straddle could also be useful. By purchasing both a call and a put option at the same strike price and expiration date, traders can profit from either a big price move, whether up or down, before the options expire. Create your live VT Markets account and start trading now.

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