Crude oil markets are closely observing an upcoming meeting between US President Donald Trump and Russian President Vladimir Putin in Alaska. A potential ceasefire in Ukraine will be a primary discussion point during the meeting.
The ongoing conflict has impacted crude oil prices by limiting Russian oil supply to global markets. Currently, Brent oil prices remain stable in the Asian morning trading session.
Short Term Volatility
We see this Friday meeting as a major source of short-term volatility for crude oil. The outcome is uncertain, creating a binary event that could swing prices significantly in either direction. Implied volatility in Brent options has been elevated, recently touching levels around 35, reflecting this tension.
Should the talks fail to produce a ceasefire, we expect the existing risk premium to remain baked into prices. With Russian exports still constrained at around 9.5 million barrels per day and the IEA’s July 2025 report showing solid demand growth, traders might consider buying call options. These positions would profit if the geopolitical tension continues to support or elevate crude prices.
Conversely, a credible ceasefire agreement would likely trigger a sharp sell-off as the war-related risk premium evaporates from the market. We remember how Brent spiked above $120 a barrel in the early stages of the conflict back in 2022, and a resolution could see a rapid unwinding of those gains. This scenario would favor traders holding put options or put spreads, positioning for a significant drop in Brent prices.
Strategies for Capitalizing
Given the high implied volatility ahead of the meeting, a drop in that volatility is almost certain once the outcome is known. We believe traders can capitalize on this by selling premium through strategies like short straddles or strangles. This play profits from the expected “volatility crush” regardless of whether the market moves up or down, so long as the move isn’t too extreme.
