Iran’s deputy president Esmaeil Saqab Esfahani warned the United States of “an eye for an eye” over oil strikes, according to Mehr news agency, as reported by The Guardian. He said Iran would attack oil facilities in countries from whose soil Iranian oil wells are targeted.
Esfahani said Tehran’s negotiation team has “grabbed the enemy’s collar at the negotiating table”. He also said Iranians should not worry about energy supply because “necessary arrangements” have been made.
Operation Epic Fury Briefing
US Defense Secretary Pete Hegseth and the chair of the Joint Chiefs of Staff Dan Caine said they will host a press conference on Operation Epic Fury, described as the bombing of Iran. The briefing is scheduled for 08:00 AM ET (12:00 GMT).
Given the threat of “an eye for an eye” on oil facilities, we anticipate a significant spike in market volatility. Traders are already moving to purchase front-month call options on crude oil to capitalize on a potential price surge following the US press conference. This is driving up implied volatility, with the CBOE Crude Oil Volatility Index (OVX) now expected to break above the 50-point mark, a level we haven’t consistently seen since the supply chain crises of 2025.
We have seen this pattern before and must act accordingly. During the 2019 attacks on Saudi Aramco’s facilities, Brent crude futures leaped nearly 20% in one trading session, and the onset of the Ukraine conflict in 2022 sent prices soaring above $130 per barrel. Based on this historical data, any actual disruption could easily push Brent crude, currently trading around $98, well into the triple digits within days.
For portfolios exposed to rising energy costs, such as those heavy in transportation or industrial sectors, hedging is now critical. We are using oil futures to lock in prices and are buying put options on airline and shipping stocks, which are particularly vulnerable to fuel price shocks. The cost of these defensive positions is increasing by the hour, but it is a necessary expense to protect against a major supply-side event.
Brent WTI Spread Signals
Traders should also closely monitor key market structure indicators like the Brent-WTI spread. This spread is currently widening past $7, reflecting the concentrated geopolitical risk in the Middle East that affects Brent pricing more directly. This situation is creating an opportunity for trades that bet on this differential increasing further as tensions escalate.
