Saudi Arabia wants cheap oil but Iran strikes keep tankers at risk — long energy
Thesis
Saudi Arabia recently tried to slash oil prices, but the market is completely ignoring them. Why? Because the US and Iran are actively trading strikes again. One article highlights that a tanker carrying Qatari crude was just hit, while another shows Iran even targeted US facilities in Kuwait and Bahrain. When Saudi Arabia tries to cool the market but prices jump anyway, it means the physical supply disruption is severe. Traders should position for oil prices to stay elevated or spike further as shipping remains dangerous.
Strategy approach
Build a long volatility strategy on USO entering when front-month WTI crude oil futures increase 3% over 2 trading days while OVX (oil volatility index) rises above its 20-day moving average. Exit when WTI drops below its 10-day moving average or after a 21-day max hold. Use a 6% trailing stop.