WTI crude rose for a second straight session, trading near $66.80 a barrel during Asian hours on Tuesday. It remained close to a six-month high of $67.23, set on 23 February.
Prices climbed on worries that supplies could be disrupted if tensions in the Middle East escalate. Oman said a third round of talks between Washington and Tehran will take place this week in Geneva.
Middle East Supply Risk
US envoys Steve Witkoff and Jared Kushner are expected to meet an Iranian delegation. US President Donald Trump said on Monday that talks will resume on Thursday. He warned Tehran of a “very bad day” if a nuclear deal is not reached.
He also dismissed reports that the Pentagon was worried about the risks of a long military campaign against Iran. Meanwhile, the US Energy Information Administration (EIA) said rising global oil inventories are likely to pressure prices.
The EIA expects global production growth to outpace consumption, which would lift stockpiles. It forecasts global inventories will rise by an average of 3.1 million barrels per day in 2026, higher than the build expected in 2025.
Traders also weighed fresh trade risks after the administration signalled new national security tariffs on several industries. These would be imposed under Section 232 of the Trade Expansion Act of 1962 and would be separate from the 15% global tariff announced on Saturday.
Trading And Volatility Outlook
We expect oil prices to test six-month highs as conflict fears in the Middle East keep a risk premium in the market. The upcoming US-Iran talks in Geneva are the main focus and are driving uncertainty. This points to higher implied volatility. The CBOE Crude Oil Volatility Index (OVX) has recently moved back above 35, a level not seen consistently since late last year.
Beyond the near-term headlines, the fundamentals look softer for the rest of the year. The EIA projects a large global inventory build of 3.1 million barrels per day in 2026. That kind of surplus typically weighs on prices. Strong output from US shale also adds to supply, which could limit upside once current tensions fade.
Demand risks are also back in focus. New US tariffs could slow economic activity, similar to how trade disputes affected markets in 2025. China’s latest manufacturing PMI slipped to 50.2, showing only mild expansion. Further trade barriers could push down oil demand forecasts in the coming quarters.
With mixed signals, some traders may look for ways to benefit from near-term volatility. Buying front-month straddles could profit from a large move in either direction after Iran-related headlines. For a longer-term view, the bearish inventory outlook suggests selling rallies or buying second-quarter put options to position for a potential pullback.
Create your live VT Markets account and start trading now.
here to set up a live account on VT Markets now
