Crude oil markets are experiencing elevated volatility even as headline prices fall below key psychological levels. Brent crude has moved under $100, yet price behavior remains highly reactive to geopolitical developments, particularly in the Middle East. The current environment reflects a disconnect between immediate supply risk and longer-term expectations embedded in pricing structures. This dynamic is reshaping how traders interpret both price signals and forward-looking indicators in the oil market.
Alex Ridgers, Global Head of Retail Dealing Desk at StoneX, has extensive experience monitoring how retail positioning responds to volatility across asset classes. Marco Saggese, VP of Clearing and Execution Sales at StoneX, brings direct expertise in energy market structure and physical supply flows, providing insight into how disruptions translate into pricing and futures behavior.
Key Themes from the Discussion
Oil volatility remains near 75 percent versus a historical norm of 25 to 30 percent, indicating sustained instability despite price declines.
Futures spreads widened significantly, reflecting immediate supply tightness in the near term.
The forward curve signals eventual market normalisation even as short-term direction remains uncertain.
Oil volatility remains significantly elevated even as Brent crude prices decline below $100, indicating persistent instability in market conditions. Marco Saggese highlights that "we were looking at volatility sitting at around 150%... we're sitting around 75% now", which remains far above the traditional 25 to 30 percent range. This sustained volatility reflects a market driven by unpredictable geopolitical events rather than stable supply-demand fundamentals. Traders are increasingly exposed to rapid price swings, where positions can shift from profit to loss within hours. This environment raises the cost of risk management and complicates decision-making across both retail and institutional participants.
Oil futures markets are indicating eventual normalisation despite ongoing short-term disruptions, creating a clear divergence in market expectations. Saggese explains that "the curve is telling us... we do see the market calming in time", even as near-term supply concerns dominate price action. Specifically, large differentials between front-month and later contracts signal immediate scarcity while implying improved supply conditions in the future. This structure suggests that market participants expect geopolitical tensions to ease, allowing supply chains to stabilise. However, until that resolution occurs, the gap between spot volatility and forward expectations is likely to persist, maintaining uncertainty across the oil market.
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--- Written by Frédéric Guétin, StoneX TV Producer
--- Experts: Alex Ridgers, StoneX Global Head of Retail Dealing Desk;
--- Experts: Marco Saggese, StoneX VP of Clearing and Execution Sales
Energy
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