WTI US Oil rose 2.50% on Thursday to about $90.45, after two days of declines. The move follows recent price falls linked to reports of possible US-Iran progress.
Oil prices remain supported by disruptions in the Strait of Hormuz, a key route for global energy trade. Shipping in the area continues to face disruption due to a dual blockade by US forces and Iran.
Strait Of Hormuz Pressure
Iranian state media reported that any transit tolls for vessels crossing the Strait would be processed through Iranian banks. This points to Tehran seeking more control over the passage.
Markets are watching for possible renewed US-Iran talks in the coming days. US President Donald Trump said discussions could restart as early as this week after talks in Islamabad last weekend did not reach an agreement.
Trump also announced a 10-day ceasefire between Lebanon and Israel, due to start at 5:00 pm Eastern Time. The report was corrected on April 16 to state that WTI rebounded after two days of losses, not three.
We see oil prices caught in a tense balance between hopes for a US-Iran deal and the physical reality of shipping disruptions around the Strait of Hormuz. This uncertainty is causing price volatility to rise, with the CBOE Crude Oil Volatility Index (OVX) now trading near 35, a sharp increase from levels seen last month. Traders should anticipate that any headline, whether diplomatic or military, could trigger a significant price swing in the coming days.
Key Risks And Trading Approaches
The primary upside risk remains a complete shutdown of the strait, a chokepoint for nearly 20% of global daily oil supply, which would immediately threaten a major supply crisis. We remember the price jolts in 2025 when similar tensions first emerged, suggesting a $10 to $15 risk premium can be added in a matter of days. Purchasing out-of-the-money call options for near-term contracts is a viable strategy to position for a sharp price spike toward the $100 per barrel mark.
Conversely, a confirmed diplomatic breakthrough presents the main downside risk, as it would erase this risk premium just as quickly. A successful deal could not only secure passage but also pave the way for an estimated 1.2 million barrels per day of Iranian oil to return to the global market, according to recent energy agency forecasts. Buying put options with a strike price below $85 could serve as a hedge against a sudden price collapse following positive diplomatic news.
Market positioning data shows that money managers have already built up significant long positions in WTI futures, indicating the market is leaning toward higher prices. This crowded trade makes the current price level vulnerable to a rapid unwind if talks progress unexpectedly well. Therefore, even those with a bullish outlook should consider using options to define their risk or employing tight stop-losses on their futures contracts.
