Oil Traders Revive Bearish Options After Iran Deal

Oil traders revived bearish options strategies. Crude prices retreated after the U.S.-Iran peace deal removed the risk of supply disruption through the Strait of Hormuz. WTI (CL) futures slid sharply after the agreement, reversing gains that had pushed prices above $80 a barrel. Brent (BZ) crude followed suit. Both benchmarks now trade near levels seen before the tension escalated.

Put open interest climbed relative to calls, reversing the trend that had dominated since the conflict escalated. Call buying surged when hedge funds piled into long positions betting on a supply shock. Those positions were unwound in the days after the deal, accelerating the price decline.

The unwind was sharp. Stop-loss selling and the expiration of near-term call options forced dealers to adjust hedges. Liquidity thinned in some sessions, amplifying the move. The positioning shift compounded the drop.

Attention now turns to physical supply and demand. The weekly U.S. inventory report on Wednesday will offer the first read on stockpiles since the agreement. A large build would reinforce the bearish trade. OPEC+ meets in early April. Members will decide production levels. If the group holds output steady, the price decline may stall. Larger builds in crude inventories would strengthen the case for further downside.

The agreement remains fragile. The U.S. has warned that noncompliance could bring renewed sanctions. Monitoring mechanisms are still being set up. That uncertainty keeps a floor under prices, even as bearish bets accumulate.

For a deeper look at crude oil fundamentals, see the crude oil profile.