West Texas Intermediate (WTI) US Crude Oil prices started the week lower due to easing tensions between the US and Iran. However, new US sanctions on Iran helped limit losses, keeping prices around $63.00. Improved US-Iran talks decreased the chances of military conflict, providing relief in the Middle East energy market. Even so, new US sanctions on Iran’s oil and petrochemical sectors, along with a weaker US Dollar, supported WTI Crude Oil prices, which benefited from trades in US Dollars.

Factors Influencing WTI Oil Prices

WTI Oil, known for its high quality and low sulfur content, is traded worldwide and greatly affected by supply and demand. Factors include global economic growth, political stability, the value of the US Dollar, and decisions from key oil-producing countries like OPEC. Weekly inventory reports from the American Petroleum Institute and the Energy Information Agency also impact prices by showcasing shifts in supply and demand. OPEC’s decisions on production quotas can either restrict or increase supply, influencing WTI price changes. OPEC+, which includes countries like Russia, also significantly impacts the global oil supply, affecting market prices. Looking back at late 2025, WTI crude prices were hovering around $63 a barrel, with hope centered on US-Iran talks. Those diplomatic efforts have stalled, bringing back a risk premium that had been fading. This shift has pushed the front-month WTI contract to around $78, reflecting a change in market sentiment.

Tightening Supply

The supply side is tightening significantly, which supports a bullish outlook for oil in the upcoming weeks. Last week’s Energy Information Administration (EIA) report revealed a surprise decrease in crude inventory of 3.1 million barrels, sharply contrasting with analysts’ predictions of a small increase. This tightness is further bolstered by OPEC+ maintaining its production cuts through the end of the first quarter, providing a solid price floor. However, the weaker US dollar, which had previously helped commodities, is no longer as significant. The Dollar Index (DXY) has stabilized above 104.5 after a stronger-than-expected US jobs report for January 2026. A strong dollar is now a hurdle, limiting the potential for crude prices to exceed $80 for the time being. Given these mixed signals, traders should consider strategies that could benefit from high volatility and a defined price floor. Selling out-of-the-money puts below the $75 support level could effectively collect premiums while expressing a cautiously optimistic outlook. This strategy allows profit from time decay and the market’s anticipation that supply tightness will prevent substantial price drops. Create your live VT Markets account and start trading now.

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