WTI futures on NYMEX traded slightly lower near $98.00 in the European session on Monday, after a four-day rise stalled above $100. The pause followed US President Donald Trump urging countries that import Gulf oil to join operations against Iranian actions near the Strait of Hormuz. Trump said nations affected by Iran’s attempted closure of the strait would send warships with the United States to keep it open. He named China, France, Japan, South Korea and the UK as countries he expected to send ships.

Geopolitical Risk And Oil Prices

Trump warned NATO would face a “very bad” future if European countries do not support his action in Iran. The Strait of Hormuz carries 20% of the world’s oil supply. At the same time, oil loadings at Fujairah port in the UAE stopped after a drone strike. Fujairah is described as the only UAE export route outside the Strait of Hormuz, raising concerns about further supply disruption. WTI stands for West Texas Intermediate, a US-sourced crude benchmark traded via the Cushing hub. Its price is driven by supply and demand, the US dollar, inventory data from API and EIA, and OPEC production quotas. Looking back at the events of 2025, we saw how quickly WTI crude prices could approach $100 a barrel when the Strait of Hormuz was threatened. The market’s reaction last year serves as a critical playbook for the current environment. This historical price action underscores how sensitive oil is to direct threats against major supply chokepoints. The key takeaway for us is that geopolitical risk in the Middle East creates extreme price volatility, making it essential to prepare for sudden upward spikes. Today, the Strait of Hormuz remains the world’s most important oil transit chokepoint, with recent figures from the U.S. Energy Information Administration (EIA) showing that over 20 million barrels per day passed through it in the last quarter. Any renewed tension in that region could easily send prices soaring past last year’s highs.

Strategy And Risk Management

Given this latent risk, we should consider buying long-dated call options on WTI futures to hedge against or profit from a sudden supply shock. Implied volatility is currently moderate compared to the peaks seen during the 2025 crisis, making premiums relatively affordable. This strategy offers a defined-risk way to capture significant upside if history repeats itself. Fundamentally, the market is already tight, which would amplify the impact of any disruption. Last week’s EIA report showed a surprise crude inventory draw of 2.5 million barrels, against analyst expectations of a small build, which is already supporting prices above $85. We saw last year how the drone attack on Fujairah port demonstrated that even infrastructure outside the Strait is not immune, adding another layer of risk. We should also monitor the WTI-Brent spread closely, as it widened dramatically during the 2025 Hormuz incident. Since Brent crude is more directly exposed to disruptions in Middle Eastern supply, a widening spread can act as an early warning signal of rising regional tensions. Setting up trades that profit from this spread widening could be a shrewd move in the coming weeks. Create your live VT Markets account and start trading now.

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