During Tuesday’s Asian session, WTI crude oil prices increased to $59.54 because of rising tensions in Iran. The US government is watching this situation closely after reports that Iranian security forces killed protesters. US President Trump announced a 25% tariff on businesses that trade with Iran. This tension affects oil supply and has led to WTI prices going above one-month highs.

Potential Increase From Venezuela

Potential oil supplies from Venezuela might limit further price increases for WTI. Trump mentioned that Venezuela’s interim government could provide 50 million barrels of high-quality oil to the US. The American Petroleum Institute (API) will release its weekly crude oil stockpiles report on Tuesday. A significant drop in inventory may raise WTI prices due to increased demand, while a large inventory increase could lower prices. West Texas Intermediate (WTI) is a high-quality crude oil used as a benchmark in the market. Many factors influence WTI prices, including supply and demand, geopolitical tensions, and decisions made by OPEC. The API and the Energy Information Administration (EIA) share weekly inventory data that impacts oil prices. OPEC and OPEC+ nations play a significant role in oil output decisions, affecting global prices.

Supply And Demand Dynamics

Looking back, tensions in Iran were pushing WTI prices toward $60 a barrel in 2025. Now, with WTI trading closer to $75, the focus has shifted from specific concerns to broader supply issues. The market seems to have accounted for some geopolitical risks, making supply and demand data more crucial for short-term movements. The current supply situation differs from the earlier concerns about Venezuelan oil in 2025. OPEC+ has remained disciplined, continuing its voluntary cuts of 2.2 million barrels per day to support prices. However, strong US production, which the Energy Information Administration confirmed reached a record high late last year, is counterbalancing this. On the demand side, the outlook isn’t as clear compared to the post-pandemic recovery. We are closely monitoring economic indicators from China, which showed its manufacturing activity declined for the third consecutive month in December 2025. This ongoing weakness in the world’s largest oil importer suggests that global demand may not grow enough to push prices much higher. Traders face a delicate balance in the coming weeks. The limited supply from OPEC+ is directly opposing the weakening demand signals, indicating a period of increased volatility rather than a clear trend. Therefore, we believe that derivative strategies, like buying straddles or strangles on near-term contracts, may be more effective than simply taking a long or short position. Create your live VT Markets account and start trading now.

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