Brent crude rose to about USD 95/bbl as tensions between the US and Iran increased around the Strait of Hormuz. Brent closed at USD 90/bbl on Friday after Iran said the strait would remain open for the rest of a 10-day US-brokered truce between Israel and Lebanon.
Iran later said the strait was closed again after the US confirmed a shipping blockade would continue. Iran was also accused of firing on vessels near the strait.
Strait Of Hormuz Risk
Early on Monday, the US intercepted an Iranian cargo ship that was attempting to breach the maritime blockade. Iran said it would retaliate, while plans for a second round of talks remained uncertain ahead of the ceasefire ending on Tuesday.
Iran said it would not take part in talks unless the blockade is lifted. Separately, the US Treasury extended exemptions to Russian oil sanctions by one month.
Oil price moves were linked to disruption risk around the Strait of Hormuz. If oil flows through the strait do not restart soon, Brent could rise above USD 100/bbl again.
With Brent crude jumping to USD 95/bbl this morning, we are advising caution due to extreme volatility. The immediate focus is on the US-Iran negotiations ahead of the ceasefire’s expiration tomorrow. The sharp price moves create significant risks and opportunities in the derivatives market.
Derivatives Market Strategy
The primary risk is a further price spike if the Strait of Hormuz, a chokepoint for nearly 21 million barrels of petroleum liquids per day, remains closed. We see a strong case for buying near-term call options, targeting strike prices above USD 100/bbl, to capitalize on a potential failure in talks. The extension of Russian oil sanctions exemptions suggests to us that Washington is bracing for a continued supply disruption.
Implied volatility in oil options has surged, reflecting the market’s uncertainty. This makes options pricing more expensive, but it also presents a clear opportunity for hedging existing portfolios against a sudden move in either direction. We remember last year, in the fall of 2025, when similar tensions caused a brief but sharp spike, catching many off guard.
A sudden diplomatic breakthrough, however, could cause prices to collapse back toward last Friday’s level of USD 90/bbl or lower. Traders should therefore consider protective put options to hedge against this whipsaw risk. The fast-changing headlines mean that any position requires careful management.
We are also looking at the broader impact, as the recent March 2026 inflation report showed energy prices were a key driver of rising costs. A sustained oil price over USD 100/bbl could pressure equities and force a reaction from central banks. This suggests looking at options on energy-sector ETFs or currency pairs sensitive to oil price shocks.
