Iran’s National Iranian Oil Refining and Distribution Company has confirmed that its oil refineries and storage tanks are unharmed. This information comes as concerns grow about recent military strikes affecting the oil market. Despite facing sanctions, Iran remains an important player in the global oil scene. The oil market is currently adjusting to a higher risk premium due to these recent developments.

Stability of Iranian Infrastructure

This update indicates that Iran’s crucial oil infrastructure is secure, even after military actions sparked worries about supply stability. The refining company’s confirmation reassures markets that, for now, there are no disruptions to oil flows from Iran. Iran is still exporting oil, mainly to Asia, and any hint of lower production can quickly affect price expectations. The risk premium—which acts as a price buffer against geopolitical uncertainties—is now being more thoroughly integrated into the futures market. Recent prices reflect real and perceived risks tied to Middle Eastern supply routes, including speculative trading and shifts in market positions. Futures curves are slightly steepening, signaling either a short-term squeeze or increased uncertainty in the coming months. Traders dealing in derivatives should keep a close eye on implied volatility. It’s risen not just for front-month contracts but also across the curve, especially for options expiring this summer. This trend indicates increased hedging activity, likely from both commercial entities and macro funds. We’ve noticed a surge in open interest for out-of-the-money calls, particularly in Brent-linked markets. While this doesn’t necessarily mean traders expect sharp price increases, it indicates a desire to guard against unexpected supply disruptions.

Market Implications and Observations

From a technical standpoint, the 100-day moving average is once again a key level for speculative long entries. With Iranian infrastructure stable, attention now shifts to shipping flows and how third parties might react to any escalation. Interestingly, spreads between global benchmarks and Middle Eastern crude have widened slightly, suggesting traders are adding a temporary premium on oil perceived to have less exposure. Forward curves have shifted enough to change calendar spread margins, creating opportunities for relative value plays. We’ve observed activity favoring June/July and July/August spreads in Brent contracts, hinting at an expectation of more reliable supply paired with short-term vulnerabilities. As a group, we’re also watching how large Asian importers respond to price increases. If their purchases stay stable, geopolitical risks may diminish faster than current prices indicate. If not, prices could remain high for an extended period. In short, while the absence of refinery damage doesn’t eliminate all stability concerns, it does lessen some market anxieties. We’ll continue to watch for changes in options skew, volume shifts in near-month contracts, and trends in time spreads to catch early signs of speculative exhaustion or renewed buying. Create your live VT Markets account and start trading now.

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