Brent crude was trading around USD 97/bbl after renewed US-Iran strikes on commercial shipping near the Strait of Hormuz lifted concerns about prolonged disruption to Middle East energy flows. The contract had earlier touched an intraday low of USD 93 per bbl before rebounding as the US and Iran exchanged attacks over the weekend. Separately, weekend talks in Moscow and Kyiv involving Witkoff and Kushner aimed to revive earlier peace proposals on the Ukraine war, but ended without a breakthrough.
OPEC+ kept its oil output policy unchanged for October, according to the report. Reuters sources said the group is likely to pause further output increases in Q4 while it reviews 2027 quota baselines. Even so, the ability of OPEC+ to steer actual supply and prices was described as limited while the Iran conflict continues to disrupt flows through the Strait of Hormuz.
Volatility Strategies For Derivatives Traders
With Brent crude hovering near $97 per barrel due to the escalating US-Iran conflict, we expect market volatility to remain exceptionally high in the coming weeks. Derivative traders should prioritize long volatility strategies, such as buying straddles or strangles, to capitalize on these sharp price swings. Historically, during major disruptions in the Strait of Hormuz—which channels roughly 21 million barrels of oil per day or 20% of global consumption—crude options implied volatility regularly surges above 40%.
Trade Recommendations In A Tight Market
We recommend that traders establish bull call spreads to capture further upside potential while limiting premium risk if diplomatic talks suddenly succeed. This is highly relevant now that OPEC+ has decided to pause output increases for the final quarter of 2026, keeping global inventories tight. With global spare capacity estimated at a slim 4 million barrels per day, any further disruption could easily push Brent past the $100 mark.
For those trading calendar spreads, we advise staying long on the near-term contracts relative to longer-dated ones to profit from the deepening backwardation. This strategy leverages the immediate panic in the physical market where buyers are scrambling to secure immediate deliveries. We also suggest utilizing out-of-the-money put options as cheap insurance against a sudden de-escalation in the region.
