Public trading strategy
Oil spikes on Middle East tension but supply is surging — short the panic spike
Thesis
The sudden closure of the Strait of Hormuz is triggering knee-jerk panic buying in oil, pushing prices up artificially fast. However, Iraq is simultaneously ramping up production to fill any void. This conflicting scenario—sudden panic followed by a flood of new supply—makes current price spikes unsustainable. We want to bet against these sudden price jumps, expecting prices to fall back down once the market digests the extra Iraqi oil.
Strategy approach
Build a mean-reversion strategy that enters short USOIL (WTI Crude) on the M15 timeframe when price spikes > 1.5% within a single 4-hour window AND the RSI(14) exceeds 70. Exit the position when price touches the lower Bollinger Band(20, 2) or after a 3-day max hold.