Brent fell by USD 15 after reports of a 14-day U.S.–Iran ceasefire and the reopening of the Strait of Hormuz. Despite this drop, Brent traded near USD 95 per barrel, above levels seen before the war.
Uncertainty remains over whether the ceasefire will be observed in full. There is also uncertainty about how quickly shipping through the Strait of Hormuz can return to normal.
Market Risks Remain Elevated
The International Energy Agency reported damage to energy infrastructure that may slow any recovery in supply. IEA head Fatih Birol said about 75 energy assets were “severely or very severely” damaged.
Reconstruction costs have been estimated at around USD 25 billion, with gas infrastructure and refineries among the worst affected. Ongoing supply disruptions are expected, especially for gas and middle distillates.
After the ceasefire announcement, European gas prices fell by nearly 20% for a short time. Even with the Strait of Hormuz open for 14 days, supply conditions remain complex.
Gas market conditions remain tight, with prices still trading well above pre-crisis levels.
Trading Implications And Positioning
We are seeing Brent crude prices settle around $95 a barrel after the initial relief from the two-week U.S.-Iran ceasefire. This drop from over $110 offers a brief window, but the price remains well above the pre-conflict levels we saw in 2025. This persistent premium reflects the market’s deep-seated anxiety about whether this truce will actually hold.
This ceasefire introduces significant uncertainty, which is a recipe for high volatility in the coming weeks. We’ve seen the CBOE Crude Oil Volatility Index (OVX) spike over 50 during similar periods of geopolitical stress in the past, like the events of 2022. Traders should therefore consider strategies that profit from large price swings, as the market will react sharply to any news of ceasefire violations or extensions.
The damage to 75 energy assets in the region is a critical factor that the market seems to be underestimating right now. These aren’t quick fixes, and the disruption to middle distillates is already showing up in refining margins. The crack spread, a key indicator of refinery profitability, has widened to nearly $35 per barrel, reflecting a tight market for diesel and jet fuel that will persist long after these two weeks are over.
We should also watch European natural gas prices closely as a sister market. The temporary 20% drop in TTF futures shows how tightly linked these markets have become since the energy crisis we saw back in 2022. Any renewed tension will likely send both gas and oil prices sharply higher in tandem.
Given this, the recent price dip looks like a chance to enter bullish positions, perhaps using call options to limit downside risk. Buying options dated three to six months out would allow us to bypass the current short-term noise and position for the supply tightness we expect to see later this year. For those uncertain of direction but certain of a large move, a long straddle could prove profitable.
