European Commissioner Ursula von der Leyen and President Trump discussed ways to increase economic pressure on Russia. They suggested speeding up the phase-out of Russian fossil fuel imports as part of new measures. President Trump also mentioned that Ukrainian President Zelenskyy might need to start negotiations to end the ongoing conflict. This comment hinted at possible talks between the leaders.

Phase Out of Russian Fossil Fuels

The renewed focus on phasing out Russian fossil fuels could help support energy prices. With winter approaching, traders should note that any real threat to Russian gas supply could lead to a jump in both European natural gas prices and Brent crude futures. In 2022, Dutch TTF gas futures spiked over €300/MWh due to supply fears, highlighting how sensitive the market can be. Although European gas storage is currently around 92% full, data from July 2025 indicates that Russian LNG still makes up nearly 10% of the EU’s gas imports. Removing this supply would carry significant risk of price increases, making call options on winter 2025/2026 gas contracts a useful hedge. However, we must consider the potential for a peace deal in Ukraine. If the conflict ends, the geopolitical risks affecting oil prices would decrease, likely causing prices to fall as worries about supply disruptions fade.

Conflicting Signals in Energy Markets

These two developments are pushing energy markets in opposite directions, leading to increased volatility. The Cboe Crude Oil Volatility Index (OVX), which has been around a calm 35, is expected to see a significant increase soon. The mixed signals make it risky to make directional bets, but strategies that profit from large price swings are now more appealing. We believe the best approach is to buy volatility in the energy sector. We are looking into long straddles on near-term Brent crude options to take advantage of significant price movements in either direction. This strategy allows us to benefit from rising uncertainty without needing to predict whether supply cuts or peace talks will be the dominant factor. Additionally, a potential end to the war could have major effects on European stocks and the defense sector. Shares in companies like Germany’s Rheinmetall AG have risen over 400% since the conflict began in 2022, and a ceasefire would likely lead to a quick reevaluation of these stocks. Traders might want to buy put options on major European defense contractors while also considering call options on broad European indices like the Euro Stoxx 50, which would benefit from lower geopolitical tensions and reconstruction opportunities. Create your live VT Markets account and start trading now.

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