Brent crude oil fluctuates around $90: Analysis of position decline and options structure

In mid-April 2026, international crude oil prices experienced a temporary rebound. After reaching a “wartime low” of approximately $90.29 per barrel, Brent crude oil entered an upward trend. As of April 17, data from Gate.io showed U.S. crude oil (XTI) at $90.04, up 2.25% over 24 hours, with a price range of $88.05 to $91.93, and a trading volume of about $7.9063 million; Brent crude (XBR) at $92.79, up 2.23%, with a range of $90.75 to $93.93, and a volume of about $6.3373 million; natural gas (NG) at $2.821, up 2.51%, with the energy sector overall showing a synchronized strengthening trend.

However, beneath this apparent “price recovery,” there are clear divergences in market structure signals. The number of open futures contracts continues to shrink, options market positions are mainly hedging conflicts, and bullish momentum remains unstable.

Supply Shock and Demand Expectations: The Underlying Logic of the Rebound

The Near-Closure of the Strait of Hormuz Triggers a Historic Supply Disruption

The near-complete closure of the Strait of Hormuz is the core variable in the current oil market. Before the conflict, this strait accounted for about 20% of global oil and natural gas transportation, with daily shipments exceeding 20 million barrels. Since late February, transportation through this critical route has sharply decreased to about 3.8 million barrels per day, most of which is Iranian oil shipped to China.

The scale of supply disruption is clearly reflected in data. OPEC’s 22 oil-producing countries saw total crude oil output plummet to about 34 million barrels per day in March, a reduction of over 9.5 million barrels from February. The International Energy Agency (IEA) estimates that global oil supply losses in March reached 10.1 million barrels per day, marking the “most severe oil supply disruption in history.” Saudi Arabia, Iraq, the UAE, and Kuwait—major oil producers within the Strait of Hormuz—collectively cut production by about 9.95 million barrels per day.

In April, the supply gap continues to widen. EIA forecasts global production will further shrink by 1.9 million barrels per day to 96.26 million barrels per day, increasing the supply-demand gap to 7.15 million barrels per day.

The spread between spot and futures prices is becoming a key indicator of actual supply tightness. As of mid-April, spot oil prices were about $50 higher than futures, with the prompt Brent price reaching as high as $141.37 per barrel, a level not seen since 2008. This spread indicates that futures prices have not fully reflected the physical market’s scarcity.

Divergence in Demand Outlook: Rare Discrepancies Between IEA and OPEC Forecasts

The IEA’s monthly report released on April 14 significantly revised its forecast, turning the 2026 global oil demand from an increase of 640k barrels per day into a decline of 80k barrels per day. The monthly downward adjustment was 810k barrels per day, with second-quarter demand expected to fall by 1.5 million barrels per day—the largest decline since the COVID-19 pandemic. The IEA states, “As supply shortages and rising prices persist, demand destruction will further spread.”

OPEC maintains a more optimistic outlook. In its April 13 monthly report, OPEC lowered its second-quarter demand forecast by 500k barrels per day to 105.07 million barrels per day but kept its full-year demand growth forecast unchanged at 1.38 million barrels per day, considering demand weakness as “mild and temporary.”

The forecast divergence between the IEA and OPEC exceeds 1.4 million barrels per day, a rare occurrence in recent years. This discrepancy reflects the high uncertainty about the geopolitical impact on the global economy and is a significant source of the current market’s volatile pricing.

The Dilemma of Monetary Policy Under High Oil Prices

In the March 2026 FOMC meeting, the Federal Reserve kept the federal funds rate unchanged at 3.50%–3.75% with a 11:1 vote, with the dot plot indicating one rate cut within the year. U.S. March CPI rebounded to 3.3% year-over-year, with energy components surging 10.9% month-over-month. Fed Governor Goolsbee publicly stated on April 14 that if oil prices remain at $90 per barrel for several months, inflationary effects will begin to transmit to other sectors.

Structural linkages are forming between oil prices and interest rate policies. On one hand, high oil prices boost inflation, constraining the Fed’s room to cut rates—CME tools show only a 1.5% probability of a rate cut in June; on the other hand, if high interest rates persist and high oil prices erode consumer spending, global economic growth could slow further, mid-term suppressing oil demand. This negative feedback loop exerts dual pressures on oil prices.

Three Signals Reveal Structural Fragility

Shrinking Positions: Continuous Capital Outflows from Futures Markets

This rebound exhibits a typical technical feature—trading volume and open interest continue to decline. Brent crude oil open contracts have shrunk by about 30% from the peak of over 700,000 contracts in March to approximately 491,810 contracts. As of the latest data on April 6, total open contracts for Brent futures are about 3,056,623, a significant decrease from previous levels.

Price rebound accompanied by declining open interest usually indicates the rally is driven by short covering or small-scale capital, rather than new long positions. Institutional capital is exiting rather than entering.

Options Structure: Hedging Conflicts and Contrarian Bets

Data from the United States Brent Oil Fund (BNO) options show that as of April 15, the put/call ratio is as low as 0.13, suggesting a bullish bias. However, this position structure is more likely a hedge—traders buying upside call options as insurance against extreme scenarios like Iran’s blockade—rather than a bet on sustained rising prices.

Implied volatility (IV) is around 72.80%, with an IV percentile of 88%, indicating the market is pricing in significant volatility. Yet, the IV rank of 50.18% suggests this high volatility environment has persisted throughout the year.

The bullish options structure contrasted with declining futures positions signals a hedging behavior rather than a clear trend—one side buying insurance, the other exiting—highlighting short-term uncertainty rather than a sustained trend.

Technical Pattern Suppression: Inverted Cup and Handle Limiting Rebound

Brent crude is currently around $94.92 per barrel, situated within the “cup and handle” part of an inverted pattern. Since the mid-March peak, Brent has fallen about 28.8%, forming an inverted cup and handle. The upward channel from the rebound constitutes the handle.

Key levels include: the 0.236 Fibonacci retracement at $97.05; a break above could test $103.90. Only closing above $111.80 would confirm the invalidation of the inverted cup and handle. The 0.382 Fibonacci level at $92.81 is support; losing this could break the handle, and further below, $89.39 (0.5 Fibonacci) would trigger a neckline break, with the target around $65.

The current rebound has not broken through the pattern’s resistance. If prices continue to consolidate in the handle zone, resistance will serve as a structural barrier for bulls.

Industry Structural Impact: Supply-Demand, Inflation, and Macro Transmission

Short-term Reshaping and Mid-term Recovery of Oil Supply and Demand

The closure of the Strait of Hormuz has caused global oil inventories to decline by 85 million barrels in March, with importers forced to draw on reserves to fill the gap. Middle Eastern and Asian refineries have cut operating rates by about 6 million barrels per day in April. The physical supply impact has yet to be fully digested.

Notably, on April 5, eight OPEC+ members agreed to increase their daily output by 206k barrels starting May, continuing the gradual exit from voluntary production cuts. However, given the daily shortfall of tens of millions of barrels, this increase has limited practical impact. Even if a ceasefire is reached and the strait reopens, restoring normal production levels will take months.

Global Inflation Trajectory and Repricing of Monetary Policies

U.S. domestic gasoline prices have already risen over $1 per gallon compared to pre-conflict levels. China Everbright Securities’ petrochemical team estimates the 2026 oil price midpoint at around $85 per barrel; repeated conflicts could push it above $90 and sustain at high levels.

UBS analysts believe that even if the Strait of Hormuz reopens, energy prices may remain elevated longer. If disruptions persist until the end of April, oil could reach $130 per barrel. Several institutions also maintain risk premiums embedded in oil prices, forecasting Brent to fall below $90 in Q4 2026, with an average of $76 in 2027.

Macroeconomic impact: sustained high oil prices will transmit through transportation, chemicals, agriculture, and other downstream sectors to end consumers, pushing core inflation higher. This will further constrain global monetary policy adjustments and may accelerate demand destruction.

Conclusion

The rebound in oil prices from wartime lows results from multiple factors acting in the short term—ongoing supply shocks, short-term inventory data favoring tightness, and geopolitical signals fluctuating. However, the continuous shrinking of positions, the hedging nature of options structures, and the technical pattern’s structural suppression collectively suggest that the current rebound lacks sufficient capital momentum to sustain it.

Deeper structural contradictions lie in the evolving timing of supply shocks and demand destruction. The status of the Strait of Hormuz, the pace of Middle Eastern energy infrastructure recovery, and the Fed’s policy choices amid high inflation will jointly determine whether oil prices can break through the current pattern’s constraints. Until the trend clarifies, price sensitivity to news signals may remain higher than its responsiveness to slow fundamental changes.