Brent crude at $106 per barrel as oil fund volatility tops 100%
Brent crude surged to $106 on March 16 after Strait of Hormuz closures and UAE port strikes, while Goldman Sachs forecasts an $85 average in April with a worst-case $150 spike. One-month oil options implied volatility climbed above 100%, matching pandemic-era extremes.
1. Brent Crude Surges Past $100
Brent crude climbed to $106 per barrel on March 16 after the effective closure of the Strait of Hormuz and renewed strikes on UAE’s Fujairah Port disrupted supply routes. This surge marks the highest level since mid-2024 and underscores growing geopolitical risk in key shipping lanes.
2. Goldman Sachs Price Outlook
Goldman Sachs projects Brent will average above $100 this month before easing to around $85 in April. The firm warns that prolonged Middle East tensions could push prices toward $150 in a worst-case scenario, reminiscent of the 2008 oil shock.
3. Extreme Options Volatility
Implied volatility for one-month oil options exceeded 100%, reaching levels not seen since the pandemic lockdown panic. Traders are pricing in wild price swings as equity markets track every crude tick in real time.
4. Implications for Brent Oil Fund
The United States Brent Oil Fund stands to benefit from elevated prices and volatility, with higher futures roll yields and potential NAV gains. However, extreme price swings could also amplify tracking errors and increase hedging costs for fund managers.