Oil Volatility Hits Multiyear Low as Threat of Mideast Conflict Lowers

Crude oil’s geopolitical risk premium, a surge in price due to fears of a broader Middle East conflict, has disappeared as tensions between Israel and Iran have eased. With the diminished threat of conflict, market volatility has returned to multiyear lows, and the options market now leans towards puts, indicating reduced expectations of price spikes. Factors like interest rates, OPEC+ supply adjustments, and global demand now dominate pricing considerations. According to Tanvir Sandhu from Bloomberg Intelligence, the likelihood of Brent crude reaching $100 by the year’s end has dropped significantly, from 17% to just 9%, reflecting a stabilization in the market and creating new trading opportunities.