WTI Oil prices are around $61.50 per barrel, benefiting from eased trade war concerns between the US and EU. US President Trump has postponed a 50% tariff on EU goods, originally set for June 1, to July 9. EU Commission President Ursula von der Leyen has expressed a willingness to hold trade talks with the US and is asking for more time to reach a possible agreement. Earlier, there were threats of tariffs after an unfavorable trade proposal from Brussels to Washington.

Geopolitical Tensions Affecting Oil Prices

Geopolitical tensions are also supporting oil prices as Israel plans military action in Gaza. Worries about increased Iranian oil supply have decreased due to stalled US-Iran nuclear negotiations. However, an increase in oil output could limit price increases. OPEC+ may raise output by 411,000 barrels per day in July and might reverse its 2.2 million bpd production cut by the end of October. WTI Oil, a type of light and sweet crude oil mainly produced in the US, is affected by supply and demand, political instability, and OPEC decisions. Weekly API and EIA inventory reports also influence oil prices by indicating shifts in supply and demand. With WTI near $61.50 per barrel, recent market strength has largely resulted from reduced fears over transatlantic tariffs. The US decision to delay a significant 50% tariff on EU goods until July has eased risk sentiment. Investors are now hopeful for renewed discussions. Von der Leyen’s comments indicate that Brussels is open to trade talks if given more time, providing a temporary boost to market expectations.

Short Term Trading Strategies

Nevertheless, postponing tariffs does not eliminate the threat. Resumed tensions in early July could create volatility, particularly if initial trade discussions fail. For energy contracts, any long positions should be approached with caution after the first week of July, especially with fresh data from EIA and API regarding inventory levels. Any calm sentiment could change quickly if rhetoric escalates or timelines slip without concrete outcomes. Geopolitical risks continue to influence market support. Israel’s strong statements about operations in Gaza highlight ongoing instability in the Middle East, but current disruptions in oil supply have not yet occurred. However, shifts in regional dynamics could tighten trading sentiment. Concerns about Iran boosting oil output have somewhat faded. US-Iran talks remain stalled, which reassures traders who were worried about oversupply earlier in the year. Iran’s lack of involvement in meaningful negotiations means Iranian oil remains sidelined, easing some downward pressure on crude prices. Nevertheless, this relief may be temporary. Production remains a concern. OPEC+ has indicated a 411,000 bpd output increase for July but is prepared to reverse the larger 2.2 million bpd cut by late Q3. Traders need to stay alert and track compliance and production updates, which can lead to significant market shifts. If OPEC+ accelerates its production plans, it could greatly affect spot prices and future contracts. The recent price increases are precarious—bolstered by diplomatic delays and temporary stability but vulnerable to supply decisions and sudden tensions. US inventory data will remain a key reference point as it often hints at discrepancies in expected versus actual demand. For short-term strategies, we are focusing on option premiums and implied volatility across contracts due to expire in late summer. The current backwardation isn’t severe, but new inventory builds or insights from OPEC ministers could widen intramonth spreads. Watching the Brent-WTI spread is also important, as it indicates transatlantic flows and export balance changes. Risk management involves being cautious with long or short positions, selectively adding protection or exposure based on shifting price drivers. Every change in geopolitical tone, inventory trends, and production quotas can weigh on positions. We are aligning closely with key data releases and real policy changes rather than just rhetoric. Create your live VT Markets account and start trading now.

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