Brent futures rose above $112 a barrel after reports that US President Trump rejected Iran’s proposal to reopen the Strait of Hormuz. CNN sources said Iran is expected to submit a revised proposal in the next few days.
Negotiations between Iran and the US remain deadlocked, with the Strait of Hormuz still closed. The report said the chance of a military campaign that quickly ends the standoff has fallen.
Market Pricing Shifts
With the closure continuing, futures prices are moving closer to physical oil prices. The near-term supply and demand balance is described as unchanged while the Iran war continues and Hormuz remains shut.
The report adds that higher UAE oil output is only discussed after the war ends and the strait reopens. The article says it was produced using an AI tool and reviewed by an editor.
Looking back at the events of 2025, we saw how quickly Brent futures surged past $112 when negotiations over the Strait of Hormuz failed. With renewed naval drills reported in the Persian Gulf this month, traders should be preparing for similar price action. The key lesson from last year was that geopolitical headlines, not traditional supply and demand figures, dictated the market’s direction.
The Strait of Hormuz remains the world’s most critical chokepoint, with nearly 20% of global oil consumption passing through it daily. We learned in 2025 that promises of increased output from other nations are meaningless as long as the strait is impassable. This physical reality means any sign of disruption should be treated as an immediate threat to supply.
Trading Signals To Watch
Derivative traders should closely watch the front-month futures contract for signs of a premium developing over later months, a condition known as backwardation. In the 2025 crisis, this spread widened dramatically, signaling a scramble for immediate physical barrels. We are already seeing the spread between the June and December 2026 contracts tighten, suggesting the market is growing nervous.
Buying call options is a direct strategy to profit from a potential price spike while limiting risk. Last year, we saw the CBOE Crude Oil Volatility Index (OVX) spike above 60 during the closure. With the OVX now creeping up past 40, options are becoming more expensive, but they still reflect a market pricing in a significant chance of disruption in the coming weeks.
Ultimately, any news regarding diplomatic talks or military posturing in the region will be the primary driver of price. During the 2025 standoff, prices swung several dollars in minutes based on unconfirmed reports. Traders should therefore prioritize monitoring real-time news flow over relying on weekly inventory reports until the current tensions subside.
