President Trump is thinking about imposing economic sanctions on Russia if there is no cease-fire. This comes after a quiet period on the issue since his meeting with Putin in Alaska. Trump has previously referenced India as an example. He raised tariffs to 50% on oil bought from Russia to warn other countries about the risks of purchasing Russian oil.

Potential Economic Impact

It seems he is renewing these threats after a recent lull. His strategy involves complicating oil trade with Russia, aiming to lower its oil revenue, which funds the conflict. The renewed talk of sanctions is creating significant uncertainty in the energy markets. This uncertainty is reflected in rising prices almost immediately. The implied volatility on crude options is increasing, with the Cboe Crude Oil Volatility Index (OVX) showing a rise of over 12% in the last 48 hours. This indicates that traders expect sharp price changes in the coming weeks, moving away from the earlier calm of August 2025. We should expect oil prices to rise. Any sanctions would limit Russia’s ability to export its crude oil. Currently, Russia supplies more than 9 million barrels per day to the global market. Even a small disruption could significantly tighten supply, according to recent EIA reports. This situation makes preparing for higher prices through derivatives a key strategy.

Strategies for Traders

Remember the price shock in 2022 when sanctions first targeted Russian energy, pushing WTI crude over $120 a barrel. While the market has adjusted since then, that event is now a big reason traders are cautious about shorting oil. This past spike is why WTI futures for October delivery are already testing the $90 resistance level. Due to increasing volatility, simply buying call options is getting expensive. A better approach might be to use bull call spreads on Brent or WTI. This method allows us to bet on rising prices while controlling risk and lowering costs. Traders are already focusing on October and November contracts with strike prices between $95 and $105. However, we need to consider that this could just be a diplomatic tactic, as seen after the Alaska meeting. A sudden breakthrough or sign that this is a bluff could lead to a sharp drop in crude prices. Therefore, holding some cheap out-of-the-money put options could be a wise hedge against a sudden market reversal. Create your live VT Markets account and start trading now.

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