Brent crude has risen to about USD 124–126 per barrel amid Iran-related tensions and a US naval blockade, adding to concerns about oil supply disruption. The June Brent contract reached USD 124, and Brent later traded near USD 126 per barrel, surpassing the previous high of USD 119.5 per barrel set on 9 March.
Reports that the US is considering military strikes in response to stalled talks with Iran have added to the risk premium in oil. Market pricing points to continued disruption, with Polymarket indicating under a 30% chance of normalised traffic through the Strait of Hormuz by end-May.
Iran Tensions And Oil Market Risks
Polymarket also places a 45% likelihood on the US lifting its naval blockade. Higher energy prices are contributing to inflation and affecting broader market moves, especially in equities and foreign exchange.
The article was produced using an artificial intelligence tool and reviewed by an editor.
We remember when the US-Iran conflict drove Brent crude to $126 per barrel last year in the spring of 2025. That period of extreme tension, marked by a naval blockade in the Strait of Hormuz, has left a lasting impression on the market’s psychology. The geopolitical risk premium that was established then has not fully disappeared.
The memory of that volatility spike, which saw the CBOE Crude Oil Volatility Index (OVX) surge above 60, informs our current caution. Today, with the OVX hovering near 35, the market is calmer but remains incredibly sensitive to any news from the region. This underlying tension suggests that any new disruption could cause prices to gap higher aggressively.
Options Positioning For Upside Protection
Currently, Brent is trading near $88 per barrel, well below the 2025 peaks but still firm due to disciplined OPEC+ supply management which has kept global inventories tight. Recent data from the Energy Information Administration shows commercial crude inventories are still 3% below the five-year average. This lean supply situation provides a floor for prices and magnifies the impact of potential disruptions.
Given this backdrop, traders should consider positioning for unexpected upside moves. Buying long-dated call options on Brent or WTI provides a hedge against a sudden flare-up in geopolitical tensions. Using call spreads can help define the risk and reduce the upfront premium cost while still capturing significant gains from a sharp price increase.
This strategy is also supported by the persistent inflation that followed the 2025 energy shock, with core inflation remaining sticky above 3.5% in major economies. Central banks are therefore limited in their ability to stimulate growth, which could weaken demand, making outright long positions in futures risky. Therefore, using options to define risk seems to be the most prudent approach for the coming weeks.
