Brent crude recorded its largest monthly percentage fall since December 2025, even after briefly rising above USD 126/bbl on renewed concerns about the Strait of Hormuz. The rise followed stalled US-Iran talks that raised doubts about reopening the waterway.
Oil posted a second weekly gain, with prices supported by geopolitical tensions and US policy rhetoric. US President Donald Trump said he would keep a naval blockade of Iranian ports.
Brent Closes Lower Despite Geopolitical Spike
Brent crude for nearest month delivery settled at USD 114/bbl on 30 April, before some developed markets other than the US and UK closed for a Labour Day holiday. The close was down 3.4% from the previous session.
WTI crude traded near USD 106/bbl and was up 12% for the week. Brent also ended April with the largest one-month percentage decline since December 2025.
We are seeing extreme volatility in oil, making it a prime environment for options traders. The massive monthly drop in Brent, despite a spike past $126, shows that headline risk can fade just as quickly as it appears. This uncertainty suggests that strategies profiting from price swings, rather than a specific direction, should be considered.
The widening gap between Brent and WTI is the most immediate opportunity. Recent EIA data shows a surprise draw of 3.1 million barrels at the Cushing, Oklahoma storage hub, which explains why WTI remains so strong. This divergence between US fundamentals and international geopolitical risk can be traded directly using Brent-WTI spread contracts.
Positioning For Options Driven Volatility
For the coming weeks, we should look at buying volatility through options. Given the stalled US-Iran talks and the naval blockade, purchasing straddles or strangles on Brent futures could be effective, as they profit from a large price move in either direction. Implied volatility has jumped to over 45%, a level not seen since the supply shocks of 2022, signaling the market is bracing for a major event.
We have seen this pattern before, particularly in the lead-up to the energy crisis in 2022, when geopolitical news caused sharp but temporary spikes before underlying supply and demand fundamentals took over again. Back then, traders who hedged against a price reversal did well. The current situation with the Strait of Hormuz, through which nearly 20% of global oil passes, presents a similar, highly unstable setup.
However, we must also watch for signs of weakening demand that could pull prices down. Last week’s manufacturing PMI data from China registered a 49.8, indicating a slight contraction and reminding us that geopolitical fears are clashing with a fragile global economy. This supports the case for Brent’s broader monthly weakness despite the recent headline-driven rally.
