Brent crude traded above US$90 a barrel as supply concerns linked to Iraq and the Strait of Hormuz outweighed the International Energy Agency (IEA) plan to release 400 million barrels from emergency reserves. Reports said Iraq’s oil ports stopped operating after two tankers were targeted in Iraq’s waters. The IEA release totals 400 million barrels, the largest on record, compared with 183 million barrels released in 2022 after Russia’s invasion of Ukraine. The release size equals about 4 days of total global oil demand.

Strait Of Hormuz Supply Risk

About 20% of global seaborne oil moves through the Strait of Hormuz each day, or roughly 20 million barrels per day. Disruption there is described as hard to replace over a longer period. If 400 million barrels were released over 120 days, this would average about 3.3 million barrels per day. That is set against a possible 10–13 million barrels per day shortfall linked to Hormuz, after allowing for diversions such as Saudi Arabia’s East West pipeline. Looking back at the events of 2025, we learned a critical lesson about market forces. Even the largest-ever emergency oil release of 400 million barrels failed to suppress prices when faced with a major supply disruption. The risk posed by the Strait of Hormuz situation simply overshadowed the temporary supply injection, pushing Brent crude above the $90 mark. As of today, with Brent crude trading near $94 a barrel, that fundamental supply tightness persists. Recent data shows OPEC+ is holding its production cuts steady through the second quarter of 2026, while the latest Energy Information Administration (EIA) report forecasts global demand will grow by 1.4 million barrels per day this year. This combination of constrained supply and rising demand creates a firm floor under prices.

Derivative Strategy Implications

For derivative traders, this suggests any significant price dip in the coming weeks should be viewed as a buying opportunity. Bullish strategies, like buying call options with strike prices around $100 for the summer months, appear justified. Selling out-of-the-money put options could also be a sound strategy for collecting premium, based on the view that a substantial price drop is unlikely. We can draw parallels to the market reaction in 2022 following Russia’s invasion of Ukraine, where initial reserve releases did little to halt the price spike. Implied volatility remains high, which makes buying options more expensive but also increases the potential income from selling them. This elevated volatility underscores the market’s continued sensitivity to geopolitical news over coordinated supply releases. Create your live VT Markets account and start trading now.

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