WTI rose for a third day, trading near $102.70 in Asian hours on Monday after holding gains around $102.50. Prices moved up on fears of supply shortages following drone attacks on the UAE and Saudi Arabia, alongside rising US-Iran tensions.
UAE officials are investigating a drone strike on the Barakah nuclear power plant and said they have the right to respond to what they called a terrorist attack. Saudi Arabia said it intercepted three drones entering its airspace from Iraq and would take operational measures to defend its sovereignty and security.
US President Donald Trump is set to meet national security advisers to discuss military options on Iran, raising the risk of a wider conflict. Reports said Washington and Tehran remain divided, with the US offering no tangible concessions in talks.
Supply worries also grew after the US let a waiver that allowed India to buy Russian seaborne oil expire, despite India requesting an extension. Concerns persisted after a two-day Trump–Xi summit ended without progress on reopening the Strait of Hormuz shipping lane.
We are looking back at the price spike in 2025 when drone attacks in the Middle East pushed WTI crude over $102 a barrel. Today, with prices holding near $80, the market appears much calmer, but the underlying risks that caused that surge remain. This situation from last year serves as a clear reminder of how quickly geopolitical events can impact energy markets.
The attacks in the UAE and Saudi Arabia in 2025 were a direct threat to physical supply, a risk that persists today. We are currently seeing continued disruptions in the Red Sea, which have already rerouted significant tanker traffic and tightened the market. With OPEC+ maintaining its voluntary production cuts of 2.2 million barrels per day, there is very little spare capacity to handle another sudden supply shock.
Given this fragile balance, we should anticipate rising volatility in the coming weeks. The CBOE Crude Oil Volatility Index (OVX) is already elevated near 30, reflecting this market tension and making options pricier than usual. Traders should consider buying call spreads to position for a potential upside move while capping the cost of high premiums.
Furthermore, the demand side of the equation remains strong, with the International Energy Agency forecasting global demand will rise by 1.1 million barrels per day in 2026. The 2025 events, such as the expiration of the waiver for India to buy Russian oil, demonstrated how sudden policy shifts can further tighten available supply. Any similar diplomatic breakdowns or escalating conflicts could easily send prices back toward the highs we saw last year.
