Trump is pushing Europe and India to stop buying Russian oil. He believes that if crude oil prices go down, Putin may be forced to end the conflict. It is hard to see the difference between global oil prices and those for Russia alone. Efforts to limit Russian oil prices have not worked because global and Russian prices are closely linked.

Impact On WTI Crude Prices

After Trump’s remarks, WTI crude prices dropped by about 20 cents. This change shows how sensitive oil markets are to political events and policy changes. Connecting crude oil prices to a potential end to the war creates more uncertainty in the market. Although WTI crude saw a slight dip, the reaction was small. This indicates that traders are not fully convinced of a clear outcome. Such uncertainty often leads to volatility rather than a new price trend in the short term. Traders are already expecting bigger price swings, with the oil volatility index (OVX) rising to around 35 in the last month. This is significantly above its normal range, showing that traders are seeking protection from rapid price changes. In this situation, strategies that benefit from volatility—like buying straddles or strangles—are worth considering instead of just betting on price direction.

Supply Versus Geopolitical Risk

There is a slight chance that a peace deal could lessen the geopolitical risk premium on oil, which could lead to a sharp price drop. Russia’s federal budget for 2025 relies heavily on oil revenues and needs Brent prices above $75 per barrel to avoid deficits. This makes buying some inexpensive, out-of-the-money put options a smart way to protect against a sudden positive resolution to the conflict. However, supply pressures remain the main focus for now. Global crude oil inventories are about 5% below their five-year average, leaving little room for disruptions. Ongoing efforts to reduce Russian oil exports could easily trigger a price spike, making call options a solid strategy too. We saw a similar trend in 2022 and 2023, where geopolitical news caused large price swings before a clear trend appeared. The key takeaway is that such discussions create a fluctuating, news-driven environment. The best strategy for traders is to position themselves for the movement itself rather than trying to predict which way prices will go. Create your live VT Markets account and start trading now.

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