Crude oil rose on Thursday after reports that Iran would keep its enriched uranium at home, then fell when Iranian state media cited Al Arabiya saying a final US-Iran draft deal, mediated by Pakistan, could be announced within hours. WTI dropped from above $101 to below $100 as the focus shifted from conflict fears to the chance of shipping routes reopening.
The recent price floor has been linked to the Strait of Hormuz, a route for close to a fifth of the world’s seaborne oil, which has been restricted since late February. Reports also said Saudi Arabia wants navigation restored to its pre-February state, which would ease supply concerns.
Market Focus Shifts To Deal Prospects
Past deadlines in March and April passed without a lasting agreement, with ceasefires announced and then broken. Current briefings were described as an agenda for talks rather than a signed deal, and Pakistan’s army chief was reportedly travelling to Tehran to narrow remaining gaps.
On the 4-hour chart, WTI has traded in May between support near $95 to $96 and resistance at $104 to $105, with a late-April peak near $107. A break below $100 could target $95 to $96, and reopening the strait could push prices towards $90, with some forecasts at $80 by year-end.
We remember how crude oil was trading this time last year, pinned entirely on headlines from the Strait of Hormuz. In the spring of 2025, the market held its breath as WTI danced around the $100 mark, driven by a potential conflict that threatened nearly a fifth of the world’s seaborne oil supply. Every trader was watching for news of a US-Iran deal, knowing that a resolution would erase the war premium that had built up since February 2025.
That premium eventually did evaporate when a brokered agreement was announced in the summer of 2025, restoring normal transit through the strait. The price fell sharply, just as we anticipated, moving from triple digits toward the $80s by the end of last year. Today, with the Strait of Hormuz seeing its normal flow of over 21 million barrels per day, the market is no longer trading on supply fears but on fundamentals.
Options Volatility Falls With Geopolitical Risk
The situation now in late May 2026 is one of balanced fundamentals, not geopolitical fear, which is why WTI is holding near $82 per barrel. The latest EIA report shows global consumption hitting a robust 104.5 million barrels per day, but this is being met by steady non-OPEC+ production growth. This balance has kept crude locked in a relatively tight range for most of this year.
For derivative traders, this means implied volatility has collapsed from the highs we saw during the 2025 Hormuz crisis. The CBOE Crude Oil Volatility Index (OVX) is currently trading near 28, a stark contrast to the elevated levels above 40 that were common during last spring’s uncertainty. With less fear of a sudden supply shock, options are significantly cheaper.
This environment is favorable for strategies that involve selling premium, as the market seems content to drift sideways. Selling strangles or iron condors outside of an expected $77 to $87 range could be an effective way to collect premium while the market digests economic data rather than war headlines. The trade is based on the idea that the intense volatility of last year is firmly behind us.
Still, we must remain vigilant for any shifts in policy from OPEC+, which meets next month, or signs of slowing demand from Asia. While the primary risk from last year has faded, the market can always find a new catalyst. Therefore, positioning should still be managed with disciplined stops in case the current calm is unexpectedly broken.
