OPEC+ said on Sunday it will increase crude oil production as US and Israeli forces launched a major attack on Iran, and Iran carried out retaliatory strikes against Israel and US military installations around the Gulf.
The group agreed an output rise of 206,000 barrels per day (bpd), which was more than analysts expected.
Market Volatility Outlook
At the time of press, WTI was up 2.67% on the day at $67.20.
We are seeing the market react to major geopolitical risk, which means volatility is the primary factor to consider for the next few weeks. The CBOE Crude Oil Volatility Index, or OVX, has likely spiked well above the 45-point level we saw during the economic jitters of late 2025. This suggests traders should prepare for wide daily price swings and consider strategies that profit from this movement.
The OPEC+ supply increase of 206,000 bpd is a symbolic gesture that will do little to calm supply fears if the conflict escalates. We know from 2025 maritime data that over 18 million barrels of oil passed through the Strait of Hormuz daily, a chokepoint that is now in a direct conflict zone. Any disruption to this flow would instantly overwhelm the small production increase and send prices much higher.
However, we must also weigh this against the potential for demand destruction if the conflict spreads and triggers a global economic slowdown. The International Energy Agency’s February 2026 report had already lowered its demand growth forecast for the year to just 1.1 million bpd, citing weaker economic data from the end of 2025. A war-induced recession would cut into demand further, creating a powerful downward pressure on prices.
For traders who believe the supply risk is the dominant factor, buying out-of-the-money call options on May and June 2026 crude futures is a direct way to bet on a price spike. Looking back at the initial weeks of the Ukraine conflict in 2022, oil prices rallied over 30%, showing how quickly markets can react to military events. This strategy offers significant upside potential if history repeats itself.
Brent WTI Spread Strategy
Those who anticipate a short-lived conflict or a swift global recession should look at put options to bet on a price decline. The U.S. Strategic Petroleum Reserve, which government data showed was rebuilt to over 400 million barrels by January 2026, could be released to cap prices. A coordinated release combined with fears of a recession could cause this initial price spike to reverse sharply.
We are also focused on the price difference between Brent crude, the international benchmark, and West Texas Intermediate (WTI). This spread, which hovered around $5 in the last quarter of 2025, is likely to widen significantly as the conflict directly threatens Brent’s supply chain more than America’s WTI. Trading this spread could be a more nuanced way to play the regional nature of the crisis.
