WTI rose more than 0.5% to around $64.50 in early European trade on Wednesday. The move was driven by supply concerns tied to rising US–Iran tensions. Reports said the US may consider intercepting ships carrying Iranian crude and could add a carrier strike group if nuclear talks fail. Prices also got support from India’s buying shifts. Indian refiners have reduced Russian crude imports while seeking a trade deal with Washington. This has increased purchases from the Middle East and West Africa.

Inventory Data Drives Near Term Focus

There was downside risk after an API report showed weekly crude oil stocks rose by 13.4 million barrels for the week ending February 6. This was the largest increase since July 2025. That compares with a Reuters survey forecast of about an 800,000-barrel rise. Markets are now waiting for the EIA inventory data due Wednesday. Traders are also watching OPEC’s monthly market outlook due later today and the IEA report due Thursday. The IEA has warned that supply will likely exceed demand this year, which could create a surplus. Oil is holding near $64.50, but this calm may not last. The market is pulled between supply risks from US–Iran tensions and signs of rising oversupply. This mix of geopolitical risk and weak fundamentals could drive volatility in the weeks ahead. The risk of the US intercepting Iranian oil shipments adds a strong risk premium. In 2024, attacks on Red Sea shipping briefly pushed prices sharply higher. A direct escalation could cause a much larger spike. Some traders may use call options to hedge against a sudden jump that could quickly lift prices toward $70.

Volatility Strategies And Key Levels

At the same time, the 13.4 million-barrel inventory build reported by the API is hard to ignore. It is the largest surplus since the demand slowdown in July 2025 and suggests weak fundamentals. Combined with the IEA’s warning that supply will outpace demand this year, the data points to steady downward pressure on prices. During the 2025 demand shock, consecutive weekly builds above 10 million barrels came before a sharp drop below $50. US crude production also remains strong, reaching a near-record 13.3 million barrels per day last month, which adds to the oversupply story. If today’s EIA data confirms a large build, geopolitical worries may not be enough to support prices. With these mixed signals, traders should expect sharp swings rather than a clear trend. Volatility strategies, such as straddles, may work well ahead of the OPEC and IEA reports later this week. Watch today’s EIA data closely, because confirmation of the API figure could break the current support level. India’s higher buying from the Middle East is supportive, but it may not be enough to absorb the current glut. Recent data shows India’s total crude imports in January 2026 were down about 4% from the prior month. A shift in suppliers alone is unlikely to offset high global inventories. Create your live VT Markets account and start trading now.

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