As of January 2026, Brent and WTI have jumped sharply, pressing up against resistance levels last seen in October 2025. According to market participants, the recent surge has been driven primarily by geopolitical escalation risk rather than a sudden deterioration in supply and demand balances. Concerns around security in the Strait of Hormuz are amplifying volatility and strengthening the near-term risk premium embedded in crude pricing. The insights below are drawn directly from a primary-source interview with a StoneX oil market specialist.
Marco Saggese, Vice President of Clearing and Execution Sales at StoneX, works closely with market participants navigating energy risk. His perspective combines market structure, physical trading realities, and the hedging decisions that emerge when volatility rises and headlines dominate price discovery.
Key Themes from the Discussion
The current oil price surge is driven by Iran-related geopolitical risk.
OPEC policy is not expected to change near-term supply settings.
Hedging and options activity are increasing as uncertainty rises.
Geopolitical Risk Adds a Premium Even with Stable Fundamentals
Geopolitical risk is dominating oil price action because the market is focused on escalation scenarios rather than immediate supply tightness. Saggese states that the recent surge was "completely backed by the situation in Iran" and highlights the strategic importance of the Strait of Hormuz for exports. He notes that the market is reacting to the possibility of disruption if tensions intensify, even though "fundamentally, the market is looking quite sensible". As a result, crude pricing is reflecting risk perception more than current balances.
Volatility Shifts Traders Toward Hedging and Insurance
Geopolitical uncertainty is changing how oil is traded, pushing participants toward defensive positioning and options-based insurance. Saggese explains that while the world still needs physical oil to move, traders will be more conservative about where they source barrels and how they hedge exposure, adding that "we have to hedge because we can't speculate on this" in a market where "we have no idea where this market is going to go". He also notes increased involvement in options markets as high premiums attract activity. Consequently, hedging demand and volatility pricing can become self-reinforcing forces in crude markets when geopolitics dominates the narrative.
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--- Expert: Marco Saggese, StoneX Vice President of Clearing and Execution Sales
Energy
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