Oil Prices Surge 7.62% Amid Middle East Tensions

On June 13, traders demonstrated a strong bullish sentiment towards oil prices, as indicated by a substantial increase in the trading of call options for WTI crude oil. The Chicago Mercantile Exchange data revealed that 33,411 contracts of WTI crude oil call options with a strike price of 80 dollars and an expiration date in August 2025 were traded, setting a new single-day record since January of this year. This surge in trading activity was primarily driven by the recent escalation of tensions in the Middle East, following an Israeli airstrike on Iran.

The heightened geopolitical risks in the region have led traders to anticipate potential disruptions in oil supply, which could drive prices higher. The market's focus has shifted towards the 80-dollar mark as a new target for oil prices. This sentiment was further reinforced by the significant increase in overall trading volume in the oil options market, which reached 681,000 contracts on June 13.

The market's reaction to the geopolitical developments was swift and pronounced. Oil prices surged by more than 7% on the day, with WTI crude oil closing at 72.98 dollars per barrel, up 7.62% from the previous close. At one point during the trading session, prices spiked by over 14%, reaching a high of 77.62 dollars per barrel, the highest level since January 21.

The escalating tensions between Israel and Iran have added to the market's concerns about potential supply disruptions. Iran confirmed that its Natanz nuclear facility was partially damaged in the Israeli airstrike, and in retaliation, Iran launched hundreds of missiles towards Israel. The Israeli defense minister condemned the attack, warning that Iran would face severe consequences.

The market's bullish stance on oil prices is further supported by the significant trading volume in out-of-the-money call options. These options, which would become profitable if oil prices rise above 85 dollars per barrel by June 25, indicate that traders are actively hedging against the risk of a sudden price increase. The lack of bearish sentiment in the market is evident, as traders are reluctant to take short positions over the weekend, given the heightened geopolitical risks.