**Brent Crude Oil Rises in January 2026** In January, the U.S. Dollar index fell by 1.4%, which helped oil prices increase. This drop was the largest in four days since the economic turmoil in April. After a 16.2% rise in Brent crude last month, oil prices are still under upward pressure. The high geopolitical risk premium in the market is here to stay for now. We expect that any further escalation regarding Iran will likely push prices over $70 per barrel. This situation is set for more volatility, and traders should adapt their strategies. The CBOE Crude Oil Volatility Index (OVX) has risen to nearly 45, its highest since the supply scares in the third quarter of 2025. Traders might find it beneficial to buy options like straddles or strangles to profit from major price changes, no matter the ultimate outcome of current tensions. For those who have a clear view on price direction, buying out-of-the-money call options is a way to bet on rising prices. Given the sharp rise in January, March and April contracts with strike prices of $75 and $80 now look like realistic targets. These options could benefit from any conflict-related supply disruption, even if it’s small. **Geopolitical Events Impacting Prices** We see a pattern similar to late 2021 and early 2022 when tensions about Ukraine caused Brent prices to jump over 30% in a few months. Historically, the attacks on Saudi facilities in September 2019 resulted in a record 15% price jump in a single day. These events highlight how quickly geopolitical issues can affect the energy market. To manage costs and risks in this unpredictable market, traders might consider using bull call spreads. By buying a call option at a lower strike price and selling another at a higher strike, the initial cost is reduced significantly. This strategy limits potential gains but offers a safer way to profit if prices continue to rise. The recent weakness of the U.S. dollar is providing extra support for crude prices. The dollar index has continued to fall in early February, making oil more affordable for buyers in other currencies, which boosts global demand. As long as this trend continues, a weak dollar will intensify price shocks from supply issues. Going forward, we are closely watching naval traffic reports from the Strait of Hormuz, a crucial area accounting for nearly 20% of global oil transport. Any disruptions there could cause immediate price changes. Traders should also keep an eye on the weekly EIA inventory reports for any unexpected drops that could indicate a tighter market. Create your live VT Markets account and start trading now.

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