WTI crude oil traded below $90.00 on Thursday and stayed within the prior day’s range. It was priced at $89.35 at the time of writing as markets watched for Middle East updates.
US President Donald Trump said on Wednesday that negotiations with Tehran were ongoing and “productive”. This raised expectations that US-Iran talks could resume within the next few days.
Middle East Talks Support Prices
In Israel, cabinet security member Galia Gamliel said on Israeli Army Radio that Prime Minister Benjamin Netanyahu would meet Lebanese President Joseph Aoun later on Thursday. Reports of Israel-Lebanon negotiations added to hopes of reduced regional tension.
The US blockade of the Strait of Hormuz continued, which limited falls in crude prices. The US military said it had fully cut off Iran’s sea trade, while Iranian officials warned they could shut the Red Sea if US port blockages continue.
US Energy Information Administration data showed crude oil stocks fell by 0.913 million barrels last week. This compared with expectations for a 0.2 million rise and followed a 3.081 million barrel build the week before.
We remember looking at this situation back in 2025, when hopes for a US-Iran deal kept WTI crude capped just below $90 a barrel. Those talks ultimately stalled, and the underlying tensions have simmered ever since. This unresolved risk continues to put a floor under the market today.
Supply Cuts And Volatility Strategies
Now, in mid-April 2026, WTI is trading stubbornly around $88, supported by fundamental factors that were less in focus last year. OPEC+ recently extended its voluntary production cuts of 2.2 million barrels per day through the second quarter, tightening global supply. This commitment from the cartel is providing strong support against any significant price drops.
However, recent data is creating indecision for the market. Last week, the Energy Information Administration (EIA) reported a surprise U.S. crude inventory build of 2.7 million barrels, against forecasts of a draw. This, combined with softening global demand forecasts from the IEA citing a slower Chinese economy, is preventing prices from breaking higher.
The geopolitical risks from 2025 have not vanished; they have evolved. Tensions in the Red Sea continue to disrupt shipping, adding a constant risk premium to prices, reminding us of Iran’s threats to shut down sea lanes last year. Any escalation in the Middle East could cause a rapid price spike, similar to the volatility we saw in 2022.
Given this balance between tight supply and demand uncertainty, implied volatility is elevated, making option premiums expensive. Traders should consider strategies that benefit from a large price move in either direction, such as long straddles, if a clear catalyst emerges. For those already holding long positions, buying puts offers a way to hedge against a sudden price drop should diplomatic progress unexpectedly resume.
To manage the high cost of options, strategies like collars, which involve selling a call to finance the purchase of a put, could be effective for protecting downside risk. Alternatively, calendar spreads could be used to bet on price stability in the short term while holding a position for a potential breakout later in the year.
