Iran said it is still considering a US proposal to end the war, after reports that the two countries may be close to an agreement, according to the BBC on Wednesday.
The US has presented Iran with a one-page memorandum of understanding that would gradually reopen the Strait of Hormuz and lift the American blockade on Iranian ports. Further detailed talks on Iran’s nuclear programme would take place later, and nothing has been agreed.
Market Reaction And Price Moves
US President Donald Trump said the US has had “very good talks” with Iran over the past 24 hours. He said there is no deadline for when he expects a response from Tehran.
At the time of writing, West Texas Intermediate (WTI) was down 7.05% on the day at $92.85.
We recall how markets reacted sharply last year when news of a potential US-Iran memorandum of understanding broke, sending WTI crude tumbling over 7% in a single day. That event serves as a critical reminder of how quickly geopolitical headlines can override fundamental supply and demand. The Strait of Hormuz remains the world’s most important oil chokepoint, with over 20 million barrels passing through it daily, making any hint of de-escalation a major bearish catalyst.
Given the memory of that 2025 price shock, implied volatility on crude oil options will likely remain sensitive to any news out of the Middle East. Traders should consider strategies that benefit from this, such as selling out-of-the-money puts or calls to collect premium, but must use disciplined risk management in case of a sudden reversal. The sharp drop to $92.85 last year shows that being short volatility is a risky, though potentially rewarding, position.
Outlook For Opec And Inventories
Attention is now turning toward upcoming OPEC+ meetings and questions surrounding compliance with production quotas. We have seen global oil inventories draw down by over 40 million barrels in the first quarter of 2026, tightening the market significantly since the speculative sell-off in 2025. Therefore, any sign of dissent within the producer group could introduce two-way price risk, creating opportunities for spread trades like bull call spreads or bear put spreads that limit potential losses.
For the coming weeks, we should anticipate that crude prices will be range-bound but prone to sharp, headline-driven moves. The current WTI price, hovering near $84 a barrel, reflects a market that has priced out the immediate risk of a supply flood from Iran but remains nervous. This environment is less about picking a long-term direction and more about managing short-term price swings through options to define risk clearly.
