Brent and WTI climbed about 4–5% after Iran–Israel missile exchanges raised concerns over energy supply disruption and the inflation outlook. WTI rose 4.7% to $94.80 and Brent gained 4.7% to $97.50, while EU natural gas advanced 5% to €51.2, its largest move in three weeks. Market focus also extended to inventories, with draws seen rising further to around 11 mb/d in June.
On supply policy, OPEC+ members including Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman agreed a combined production increase of 188,000 b/d from July 2026. The group also kept scope to adjust the plan, retaining the option to increase, pause or reverse the phased withdrawal of cuts, including those announced in November 2023.
Geopolitical Fears and Market Tightness Drive Energy Prices
With Brent crude pushing towards the psychological $100 per barrel level, we see the immediate future as being driven by geopolitical fears rather than fundamentals. The direct missile exchanges between Iran and Israel have injected a significant risk premium into the market. This heightened tension suggests that holding long positions through call options is a prudent strategy to capture potential price spikes.
The underlying market is already tight, which amplifies the effect of any supply disruption fears. Recent data from the Energy Information Administration (EIA) has consistently shown weekly crude inventory draws over the past month, with the last report indicating a larger-than-expected draw of 2.5 million barrels. This existing tightness supports the view that draws could intensify, providing a solid floor for prices even if tensions ease slightly.
OPEC+ Policy, Volatility, and Cross-Market Opportunities
We view the recent OPEC+ decision as bullish for oil prices in the near term. The planned 188,000 barrel-per-day increase for July is a token gesture and signals the group is in no rush to cool this rally. Their explicit mention of flexibility to pause or reverse cuts tells us they are more likely to defend high prices than to increase supply into an uncertain market.
Historically, events like this cause significant volatility, which traders can use to their advantage. For instance, after the 2019 drone strikes on Saudi Aramco facilities, Brent crude jumped nearly 15% in a single trading session. While ceasefire talks represent a downside risk, the current momentum favors the bulls, meaning any long positions should be protected with stop-losses in case of a sudden diplomatic breakthrough.
The spillover into the European natural gas market, which hit a three-week high, should not be ignored. It confirms that traders see a broad risk to energy supplies flowing from or through the Middle East. This offers a correlated trading opportunity in TTF futures, as a disruption in the Strait of Hormuz would impact LNG shipments as well as oil tankers.
