Oil and Brent prices kept rising after reports that three commercial vessels were struck by projectiles near the Strait of Hormuz. Markets focused on the risk of disruption around the waterway. IEA members agreed to release a record 400 million barrels of emergency reserves. This was more than double the 182 million barrels released after the Russian invasion of Ukraine in 2022.

Market Seen Release As Temporary

The release did not stop gains, as the action was treated as short-term support rather than a longer-term fix for supply risks linked to the Strait of Hormuz. Concern remained about further supply shocks. President Trump said the IEA release would ease energy price pressures while the US continues its campaign against Iran. Oil market worries continued despite this statement. Reports said President Trump may invoke the Cold War-era Defense Production Act to support oil production off Southern California. US Interior Secretary Doug Burgum said the law is “absolutely” under deliberation to help a Houston-based company drill and to bypass state-level permit issues. The economic outlook was described as moving towards stagflation, with firm economic data offset by supply-side pressures. The article was produced using an AI tool and checked by an editor.

Looking Back From Early 2026

Looking back to 2025, the market correctly viewed the massive IEA emergency oil release as a temporary fix rather than a real solution. As of today, March 12, 2026, government data confirms over 80% of those 400 million barrels have already been absorbed by the market. This leaves the global supply system with a thinner cushion than it had a year ago. The geopolitical risk premium remains high, as tensions in the Strait of Hormuz have not abated since the vessel strikes last year. Just last month, February 2026 trade data showed a 12% increase in shipping insurance premiums for tankers passing through the strait, reflecting the market’s ongoing fear of a sudden supply disruption. We believe any further escalation will cause a sharp price spike that is not fully priced in. The US policy response that was deliberated in 2025 is proving to be a slow-moving solution. While the Defense Production Act was invoked to fast-track drilling, industry timelines show new significant production from these California projects is still over a year away. This domestic supply increase is a story for 2027, offering no relief for the tight market we face today. The stagflationary environment we worried about has become a reality, with the latest reports showing US GDP growth for the last quarter at a weak 0.7% while inflation remains sticky at 4.2%. Historically, this combination makes the market extremely sensitive to commodity price shocks. Therefore, we expect any upward move in oil to be magnified by these broader economic fears. Given this backdrop, we see opportunities in long-dated call options on Brent crude, which is currently trading near $97 per barrel. Current implied volatility is not fully capturing the risk of a sudden escalation in the Middle East. Buying calls provides a defined-risk method to gain upside exposure to the supply-side shocks we continue to anticipate in the coming weeks. Create your live VT Markets account and start trading now.

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