WTI crude fell for a third straight day on Thursday and traded at $90.66. The move followed reports linked to US-Iran peace talks and speculation about the Strait of Hormuz reopening.
Al-Hadath wrote on X, citing sources close to the talks, that intensive communications are under way to gradually reopen the Strait. The strait is a chokepoint for about 20% of the world’s oil supply.
Signals From Peace Talks
Reports said Tehran is reviewing the latest US peace proposal that would formally end the war. Sources cited by Reuters said it would also set a framework for nuclear talks, the reopening of the Strait of Hormuz, and the removal of US sanctions on Iran.
WTI has fallen about $17 from last week’s highs. It remains nearly 40% above pre-war levels, as the future status of Hormuz is still unresolved.
Market participants are waiting for a clear signal on reopening the passage. This could move oil and gas prices closer to pre-war levels.
We saw crude prices fall sharply late last year as progress in the US-Iran peace talks became public. The WTI market, which had peaked over $107, dropped to around $90 on the initial speculation of the Strait of Hormuz reopening. This initial move was driven purely by the prospect of de-escalation.
Market Repricing After The Accords
Now that the Hormuz Accords are in place, the market has repriced for the new reality of increased supply. Iranian exports have already climbed by nearly 900,000 barrels per day since February, and with WTI currently stable around $78, the primary geopolitical risk premium has evaporated. Vessel transit data through the Strait is already back to 95% of pre-war levels, confirming the normalization of this critical route.
For derivative traders, this means the environment of high implied volatility we saw throughout late 2025 is largely behind us. Selling premium through strategies like covered calls or short strangles on oil ETFs may now be more attractive than buying expensive protection. The oil volatility index (OVX) reflects this, having fallen from peaks near 55 during the conflict to a more subdued level in the low 30s.
The focus must now shift from geopolitical headlines to supply management by OPEC+. In response to the new Iranian barrels, OPEC+ extended their voluntary production cuts in their April meeting, placing a floor under the market. Trading calendar spreads to capitalize on expectations of future market tightness could be a key strategy for the coming months.
Looking ahead, the downside risk from peace is now fully priced in, but questions about global demand remain. Recent manufacturing PMI data from China has been weaker than expected, suggesting a potential headwind for consumption. Any further price moves will likely be driven by these macroeconomic factors rather than the regional conflicts that dominated the past year.
