Brent crude rose after US-Israel strikes on Iran, which led to a new war in the Middle East. Brent traded above USD 80/bbl in Asia and was compared with last June’s USD 80 peak. On Sun (1 Mar), Brent spiked 10% to US$80/bbl. It later opened Asia trade with a 12% jump above a US$81 opening price. At 7:30am SGT, Brent was at US$79.39, up US$6.52 or 8.9%. Some analysts said it could climb as high as US$100 after the strikes. In an OPEC+ meeting on Sun (1 Mar), the group led by Saudi Arabia and Russia decided to raise output by 206,000 barrels in Apr. This was faster than the 137,000 barrels increase made in Dec. The dataset links a sustained move above last June’s USD 80/bbl high with renewed risk aversion. It also associates this with weaker Asian equities and regional currencies. The article says it was created with help from an Artificial Intelligence tool and reviewed by an editor. With Brent crude spiking over 10% on the back of military strikes in Iran, we are seeing a massive surge in market volatility. The CBOE Crude Oil Volatility Index (OVX) has likely jumped over 40%, its highest level since the market turmoil of early 2024. This signals that options premiums are expanding, making it an opportune time to buy straddles or strangles to trade the explosive price swings we expect. The direct escalation in the Middle East presents a clear threat to supply, making bullish positions on oil attractive despite the high entry point. We are likely to see traders buying May and June call options on Brent and WTI futures to bet on prices climbing toward the $100/bbl mark. This situation is reminiscent of the 2019 attacks on Saudi oil facilities, which caused a temporary but sharp spike, and reports already suggest shipping insurance premiums through the Strait of Hormuz have doubled overnight. This oil shock is a classic risk-off signal for the wider market, which will likely weigh on Asian economies that are heavily reliant on energy imports. We should consider taking short positions in Asian equity indices and long positions in the US dollar against currencies like the Japanese yen and South Korean won. A flight to safety is already evident, with the US 10-year Treasury yield dropping this morning, a typical reaction during periods of geopolitical stress. However, the small OPEC+ output increase of 206,000 barrels per day is a signal that producers may want to cap the rally to avoid demand destruction. Given the soft global manufacturing data we saw at the end of 2025, a sustained period of oil prices above $85/bbl could easily tip fragile economies into recession. This makes selling into this strength or buying put options a viable contrarian strategy for those who believe the geopolitical panic will subside.

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