WTI was trading near $102 per barrel, a three-week high. The rise followed reports that US President Donald Trump was discussing with oil firms a blockade in the Strait of Hormuz unless Iran changed course.
Trump warned Iran to “get smart soon” and sign a nuclear deal. The report linked the price move to fears that the blockade could be extended.
Uae Leaves Opec
The United Arab Emirates (UAE) announced on Tuesday that it was leaving OPEC. The move came during an energy crisis linked to US-Iran conflict and added uncertainty around oil output co-ordination.
The UAE had been one of OPEC’s largest producers. The exit reduced OPEC’s ability to co-ordinate supply and widened tensions with Saudi Arabia, which leads OPEC.
On a four-hour chart, WTI traded at $102.05. It was above the 20-period and 100-period SMAs at about $96.09 and $91.81.
The next resistance level was $102.70, while the RSI (14) was around 72. Support levels were listed at $101.17, $100.45, and $99.14.
Trading Implications And Risk
The technical analysis was produced with help from an AI tool.
Given the market’s memory of last year’s events, the current calm feels temporary. We saw WTI surge to $102 in 2025 on fears of a Strait of Hormuz blockade and the UAE’s shocking exit from OPEC. This backdrop suggests that any new geopolitical flare-up could cause a rapid price spike, making complacency a risky strategy for traders.
The key takeaway from the 2025 tensions is that uncertainty is high, which means volatility is likely to be our main trading theme. Options strategies that profit from large price swings, like long straddles, could be effective in the coming weeks. Implied volatility in crude options is currently lower than its peak during the 2022 energy crisis, presenting a potentially undervalued opportunity to position for a big move.
Right now, oil is trading closer to $84 per barrel, but we must consider that the U.S. Strategic Petroleum Reserve is near a 40-year low, leaving little cushion for supply disruptions. This low inventory means the market is far more sensitive to supply shocks than it was in previous years. Any hint of renewed conflict could send prices climbing much faster than they otherwise would.
We only need to look back to early 2022, when the conflict in Ukraine sent WTI from around $90 to nearly $130 in just two weeks. The situation in 2025 with Iran and OPEC showed similar potential for a rapid, headline-driven rally. That historical precedent proves how quickly the market can re-price geopolitical risk.
For traders with a bullish outlook, buying out-of-the-money call options on WTI futures offers a low-cost way to capture potential upside. For example, contracts with a $95 strike price for late summer provide leveraged exposure if we see a repeat of last year’s supply fears. The limited upfront cost of the option premium defines the total risk on the trade.
Conversely, the technical signals of an overbought market from last year’s rally should not be ignored. If diplomatic efforts succeed or global demand shows signs of weakening, prices could fall sharply. Hedging long positions with put options or establishing bear put spreads could protect against a sudden downturn toward the low $70s.
