Brent crude fell after a sharp two-day rise linked to US–Iran tensions. Deutsche Bank said some weekend risk premium was being removed, even as reports mentioned possible US strikes on Iran.
The report referred to a recent build-up of US forces in the region. It also cited the New York Times saying Donald Trump is considering an initial targeted strike against Iran in the coming days, with the option of a larger attack if Iran does not meet US nuclear demands.
Market Reaction And Risk Premium
Brent was down -1.21% at $70.85 per barrel at the time of publication. Deutsche Bank also noted this was Brent’s largest two-day jump since October 2025.
Over the week, Brent rose +5.92%, including a +0.14% gain on Friday. The article said it was created with the help of an artificial intelligence tool and reviewed by an editor.
We are seeing a slight pullback in Brent crude to around $70.85/bbl, but this appears to be a minor unwinding of the weekend risk premium rather than a fundamental change in sentiment. The underlying threat of a US strike on Iran keeps the market extremely tense. Any trader should be prepared for sharp, headline-driven moves in either direction.
This heightened tension is directly reflected in the options market, where implied volatility has climbed. The CBOE Crude Oil Volatility Index (OVX) is trading near 45, well above its recent average, making options contracts more expensive. This suggests that buying protective puts to hedge long physical positions or using call spreads to bet on a spike could be prudent, though the entry cost is high.
Historical Parallels And Supply Shock Risk
Looking back, we remember the sharp two-day price jump in October of 2025 was a clear warning of how quickly this market can move on geopolitical rhetoric. That situation, much like the 2019 attacks on Saudi Aramco facilities that briefly sent prices soaring nearly 20%, showed how vulnerable supply is to regional conflict. We believe any actual military action would cause a price reaction far exceeding what we saw last year.
The key risk continues to be the Strait of Hormuz, a critical chokepoint through which nearly 20% of global oil consumption, or about 21 million barrels per day, still transits. Even a minor disruption there would have an immediate and dramatic impact on prices, likely pushing Brent well past the $85 mark. Therefore, holding unhedged short positions in the coming weeks carries an exceptionally high degree of risk.
