The price of West Texas Intermediate (WTI) oil went up over 2%, reaching about $75.50 per barrel. This increase is due to U.S. military strikes on three Iranian nuclear facilities, raising concerns about oil supply. U.S. President Donald Trump mentioned that the strikes hit Fordow, Natanz, and Isfahan, coordinated with an Israeli operation. Tensions with Iran could escalate further, as Tehran has promised to retaliate.

Impact Of Potential Closure Of Strait Of Hormuz

Traders expect oil prices to rise even more because of fears that Iran might close the Strait of Hormuz, a crucial route for about 20% of the world’s crude oil supply. Even though there are alternative pipeline routes, a significant amount of oil may remain unexported if access to the strait is blocked. WTI Oil is produced in the U.S. and transported through the Cushing hub. It serves as an important benchmark in the oil market. Prices for WTI Oil can change based on supply and demand, political situations, and global economic factors. Weekly oil inventory reports from the API and EIA also influence prices by showing supply and demand changes. OPEC’s decisions, which involve major oil-producing countries, play a critical role in determining WTI Oil prices. The recent increase in WTI crude oil, which rose over 2% and settled around $75.50 per barrel, is linked to heightened tensions in the Middle East. This tension stems from U.S. and Israeli military actions targeting Iranian nuclear sites in Isfahan, Natanz, and Fordow. President Trump confirmed the strikes, describing them as a strategic response, which raised urgent concerns about oil supply. Iran’s strong condemnation of the attacks and its threat of retaliation poses a real danger to maritime logistics in the region, especially concerning the Strait of Hormuz. This narrow route is essential for transporting nearly one-fifth of the world’s crude oil. Although there are alternative pipeline options, they cannot fully compensate for a potential closure of this key maritime route. Consequently, the oil market is adjusting to this supply chain risk.

Geopolitical Influence On Oil Pricing

We’ve seen this happen before—the markets react quickly when geopolitical events occur in key energy areas. As we move forward, contract holders should watch for changes in oil pricing, specifically looking for signs of increased short supply. If this trend continues over the next week, those positioned for tight supply could benefit. One aspect often overlooked during geopolitical events is how supply chains respond. Even without extended disruptions, market sentiment tends to stay high until political stability returns. This sentiment impacts refining margins and transportation costs, influencing how traders develop strategies around fuel derivatives and energy-related indices. Weekly inventory data from the API and EIA can provide temporary insights into domestic supply, but they likely won’t overshadow the broader geopolitical factors at play. For instance, last week’s unexpected drop in commercial stocks was largely ignored as traders focused more on long-term risks rather than short-term supply adjustments. Regarding policy, OPEC’s decisions will be under close observation. Their production quotas, especially from Gulf countries, may be revised if regional shipping faces new challenges or insurance costs rise. They might be willing to help address global supply imbalances, though any changes could lag behind spot market shifts. Since WTI is settled at the Cushing delivery point, it’s also important to consider how much crude from the Gulf Coast is redirected inland. This could widen the Brent-WTI spread again, creating opportunities for arbitrage or different hedging strategies. Pay attention to any significant build-up in Gulf inventories, which may ultimately affect price differentials. As traders adjust their positions using options and swaps, we see that volatility pricing is already indicating higher uncertainty in the future. Traders are reevaluating costs for near-date crude options, which are seeing price increases. There’s also a rise in AI-generated alerts for refining operations as companies respond to this price spike. In addition to traditional supply-demand analytics, keep an eye on freight rates, insurance costs, and geopolitical risk indices—data increasingly integrated into quantitative models. These factors can influence trading positions on ICE and CME-linked energy contracts and impact overall market liquidity. Create your live VT Markets account and start trading now.

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