Deutsche Bank reported a sharp reversal in Brent crude after conflict-related headlines, as concern about Iran-linked supply risks eased. Brent fell 11.28% in one day to $87.80 a barrel, the largest daily drop since March 2022, and was slightly lower again the next morning. The 12-month Brent future dropped 1.93% to $72.05 a barrel. Brent was about 27% below Monday’s intra-day highs, but still around 20% above levels seen before US and Israeli strikes against Iran.

Drivers Of The Reversal

Price swings followed several news events, including US political comments and a statement from Saudi Aramco. Saudi Aramco said it would raise crude flows through its pipeline to the Red Sea to 7mb/day within a few days, allowing it to resume 70% of its usual oil shipments. Late-session reports about possible mining of the Strait of Hormuz briefly lifted prices. Prices then fell again after the Wall Street Journal reported that the IEA proposed the largest oil reserve release in history to address rising prices. Looking back at the sharp reversal in 2025, we are reminded how quickly geopolitical news can drive the oil market. That event, which saw an 11% one-day drop, serves as a crucial lesson for the current environment. With Brent currently trading around $92/bbl amid renewed Mideast shipping concerns, the potential for similar volatility remains high. Given the memory of 2025’s sudden price collapse, traders should consider strategies that profit from volatility itself. Implied volatility on Brent options has already crept up, with the OVX index rising from 30 to 35 in the last two weeks. This suggests using straddles or strangles could be more effective than taking a simple directional bet on prices. The underlying supply and demand fundamentals remain tight, which contrasts with the headline risks. The latest OPEC+ meeting maintained production cuts into the second quarter, and the EIA’s March 2026 outlook slightly lowered its forecast for US shale growth. This suggests that while a sudden diplomatic breakthrough could cause a price drop, the fundamental floor is higher than it was a year ago.

Positioning And Risk Management

We saw in 2025 how announcements from Saudi Aramco or the IEA could reverse a rally in a matter of hours. Therefore, holding long positions without protection is very risky in the coming weeks. Traders should consider using call spreads to cap upside but lower entry costs, or buying puts as a direct hedge against a sudden drop. The futures curve also tells a story, with the 12-month forward price around $81/bbl, indicating sustained tightness but not panic. This backwardation supports holding long positions, but the lessons from 2025 teach us to be prepared for sudden news to overwhelm fundamentals. Watch for any statements regarding strategic petroleum reserve releases, as this was a key driver of the sell-off back then. Create your live VT Markets account and start trading now.

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