Eight OPEC+ countries with voluntary curbs will decide this weekend on oil output for April. Sources indicate a possible quota rise of 137,000 barrels per day.
The market is described as less oversupplied than expected at the start of the year. Part of the oversupply is hard to sell because of sanctions and is being stored in tankers at sea.
Supply And Production Outlook
Supply disruptions have also been reported, including recently in Kazakhstan. A gradual production increase is discussed, but Russia is producing less than agreed.
A small output rise is presented as unlikely to lower oil prices. Attention is focused more on the US–Iran conflict and the possibility of further supply disruption.
Talks held yesterday did not produce a breakthrough. The mediator Oman and Iran described the talks in positive terms.
Another round of talks is scheduled for next week. The risk of a US military strike is cited as a key factor supporting oil prices in the near term.
Market Pricing And Volatility
With the OPEC+ decision imminent, we don’t expect their modest quota increase to weigh on prices. An additional 137,000 barrels per day is insignificant when Russia is already underproducing and global demand remains strong. This indicates that the fundamental supply picture will remain tight for the near future.
The primary driver supporting the market is the geopolitical tension between the US and Iran. This risk has helped keep Brent crude futures firm, trading around $92 per barrel as of late February. Any potential military action could cause a significant and rapid price spike, and the market is pricing in this possibility.
This persistent uncertainty has pushed oil market volatility higher, with the OVX index currently elevated near 38. For traders, this makes long-volatility positions, such as buying near-term call options, a viable strategy to capitalize on a potential price surge while defining downside risk. Selling puts or put spreads could also be considered for those confident in a price floor created by these tensions.
We observed a comparable situation in the early months of 2022, when looking back from 2025, geopolitical fears added a substantial premium to oil prices long before major physical supply disruptions occurred. That historical pattern suggests we should remain positioned for upside driven by headlines alone. The current environment does not favor taking on significant short positions.
