WTI, the US crude oil benchmark, traded near $104.90 in early Asian hours on Thursday. Prices rose as the US maintained a naval blockade of Iranian ports and the UAE announced it will leave OPEC.
On Wednesday, US President Donald Trump said the blockade would continue until a deal is reached with Tehran on Iran’s nuclear programme, according to Bloomberg. Iran warned of “unprecedented military action” if US blockading of Iran-linked vessels continues.
Uae Exit And Iran Blockade
The UAE said it will exit OPEC on 1 May. The announcement on Tuesday followed weeks of missile and drone attacks on the UAE attributed to Iran, which is also an OPEC member.
The report linked the move to an “unprecedented energy crisis” connected to the Iran war. The developments added to tensions between the US and Iran, supporting higher WTI prices.
With WTI crude holding strong above $100, we see the lasting impact of the geopolitical turmoil that defined last year. The US naval blockade of Iran and the UAE’s departure from OPEC in 2025 have embedded a significant risk premium into the market. Derivative traders should therefore anticipate continued volatility and an upward bias in pricing for the near future.
The market’s nervousness is reflected in options pricing, with the CBOE Crude Oil Volatility Index (OVX) recently hitting 55, a level not seen since the initial price shocks of 2025. This high implied volatility suggests that buying outright call options will be expensive. We believe traders should consider strategies like bull call spreads to bet on further upside while mitigating the high premium costs.
Positioning For Continued Volatility
Recent supply data reinforces this bullish outlook, as last week’s EIA report showed a commercial crude inventory draw of 3.8 million barrels, nearly double the consensus forecast. This indicates that the disruption to global supply chains from the blockade is already tightening the US market significantly. We expect this trend to continue, making short positions exceptionally risky in the coming weeks.
We’ve also noted the spread between Brent crude and WTI has widened to over $8, its highest level in nearly two years. The conflict is disproportionately affecting the Brent benchmark, which is more exposed to seaborne trade disruptions from the Middle East. This makes a long Brent, short WTI spread trade an effective way to isolate and profit from the specific geopolitical risk.
Given that diplomatic channels between the US and Iran remain frozen, the odds of a sudden military escalation or further supply shock are high. We advise traders to position for sharp, upward price movements over the next several weeks. Any price dips caused by unrelated macroeconomic news should be viewed as opportunities to add to long positions.
