WTI oil is steady at about $57.50 as traders prepare for the OPEC+ meeting on Sunday. It’s expected that production increases will be on hold, which could lead to higher prices due to supply worries from Ukrainian drone strikes on Russian oil facilities and rising tensions. In the US, the Treasury has placed sanctions on oil traders for helping Venezuela evade restrictions with four tankers. Among these tankers, the Panama-flagged Nord Star and Guinea-flagged Lunar Tide have delivered Venezuelan oil to Asia and the Caribbean this year. These actions are making it tougher for Venezuela’s state oil company, PDVSA, to operate.

US Crude Inventory Report

The Energy Information Administration (EIA) has reported a drop in US crude inventory by 1.934 million barrels. This is much more significant than the expected decline of 0.9 million barrels and is the largest decrease since mid-November, suggesting changes in how supply and demand are working. WTI, which stands for West Texas Intermediate, is valued for its low sulfur content. Its price is influenced by factors like supply and demand, global events, and decisions made by OPEC. The decisions OPEC makes about production levels have a big impact on WTI prices. With WTI crude holding steady near $57.50, all eyes are on the upcoming OPEC+ meeting this Sunday. The market believes that the group will likely keep its production cuts, continuing the approach from last November. This expectation is providing support for oil prices as we head into the weekend. Concerns about supply disruptions due to geopolitical events are pushing prices higher. Last week’s Ukrainian drone strikes on Russian facilities put around 300,000 barrels per day of refining capacity temporarily offline, highlighting ongoing risks. Any escalation in the long-standing conflict, even with peace talks underway, could cause oil prices to spike suddenly.

Impact of Geopolitical Events on Oil Prices

There is also encouraging data on the demand side, with last week’s EIA report showing a nearly 2 million-barrel drop in US crude inventories. This larger-than-expected reduction indicates strong demand as we start the new year. Stricter sanctions on Venezuela’s “shadow fleet” are also limiting supply, which supports current price levels. Considering the potential surprises from the OPEC+ meeting or escalating geopolitical tensions, there is rising interest in buying call options. These options offer a low-cost way to benefit if WTI prices rise sharply above $60. This strategy helps traders hedge against or take advantage of unexpected supply disruptions in the upcoming weeks. The uncertainty itself is creating trading opportunities. Implied volatility for oil options has increased, similar to the trend before the June 2025 meeting. Some traders are utilizing long straddle strategies that involve buying both a call and a put option at the same strike price. This approach profits if the oil price moves significantly in either direction after the Sunday meeting clarifies the current uncertainty. Create your live VT Markets account and start trading now.

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