Iran’s National Iranian Oil Refining and Distribution Company reports no damage to its oil refineries or storage tanks. This announcement comes amid concerns about recent strikes affecting the oil market.

Despite sanctions, Iran continues to be a key player in the global oil market. The market is currently incorporating a higher risk premium as a result of these developments.

Stability Of Iranian Infrastructure

This update signals that Iran’s core oil infrastructure has remained intact, even after recent military actions raised concerns about supply stability. The confirmation from their refining company serves to reassure markets that, for now, there’s no disruption to physical flows from that direction. Because Iran is still actively shipping oil—largely to Asia despite sanctions—any perception of reduced output tends to shift price expectations quickly.

The risk premium—what essentially amounts to an elevated price buffer due to geopolitical concerns—is now being digested more thoroughly by the futures market. Prices in recent sessions have reflected both the real and perceived vulnerabilities around Middle Eastern supply routes. That includes speculative hedging and behavioural shifts in positioning. Futures curves are beginning to steepen modestly, hinting at either a short-term squeeze or, at the very least, increased uncertainty extending into nearby months.

Derivatives traders should be watching implied volatility closely. It has ticked higher not just in front-month contracts, but also across the curve, particularly in options expiring through the summer. That move suggests wider hedging activity—most likely from both commercial participants and macro funds. We’ve seen some increased open interest in out-of-the-money calls, especially in Brent-linked markets. These positions don’t necessarily mean traders expect a sharp price move upward, but they are consistent with protecting against tail risk—essentially, surprise supply shocks.

Market Implications And Observations

From a technical perspective, the 100-day moving average is once again a reference level for speculative long entries. With Iranian infrastructure stable, attention now leans more towards shipping flows and third-party responses to any escalation. Notably, spreads between global benchmarks and Middle Eastern grades have widened slightly, an indicator that traders are assigning a temporary premium to crude perceived as exposure-light.

Forward curves have shifted just enough to alter calendar spread margins. There’s an opportunity for relative value plays. In fact, we’ve spotted activity favouring June/July and July/August spreads in Brent contracts, which could suggest expectations of longer supply security paired with shorter-term vulnerability.

As a collective, we are also watching for demand-side reactions—particularly from large Asian importers who are sensitive to price spikes. If their purchases remain steady, the geopolitical risk may fade more quickly than current pricing implies. Otherwise, a lasting re-pricing higher could result.

Put simply, the absence of refinery damage hasn’t removed all instability concerns—but it strips away one layer of market anxiety. We’ll continue to monitor options skew, volume shifts in nearby month contracts, and the behaviour of time spreads for early signs of speculative exhaustion or renewed buying.

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