Oil: Normalization paths diverge after US-Iran deal – Societe Generale

FXStreet Insights Team FXStreet

Societe Generale analysts Jitesh Kumar and Jeremy Sellem note that Brent Oil prices are normalizing following the US-Iran deal, but highlight differing adjustments across spot, volatility and option skew. They focus on the 4th Brent future, 3‑month implied volatility and 25% delta call/put skew, benchmarking moves versus early‑2026 stress levels to assess how far each parameter has retraced.

Brent metrics show uneven normalization

"The much anticipated US-Iran deal seems to be in place, and oil prices are starting to normalize."

"However, the normalization is very different across various parameters like spot, volatility and option skew."

"For spot prices, we look at the evolution of the 4th Brent future. For volatility, we compare the path of 3 month implied volatility of Brent futures, and for skew, we monitor the ratio of 25% delta call option volatility to the 25% delta put option volatility. The starting level at the beginning of 2026 is marked 0%, and the highest point during 2026 is marked 100%, and we evaluate how much each of these parameters has retraced from this highest stress point."

"We find that the maximum stress levels were achieved in volatility first (12-March-2026),..."

"You agree to receive all communications by email or through dedicated websites."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD gains traction near 0.7100 as the post-Fed USD rally pauses

AUD/USD finds fresh buyers and retakes 0.7100 in the Asian session on Thursday as the US Dollar pauses its hawkish Fed-inspired rally to its highest level since late July. However, RBA rate-hike bets and hopes for US-Iran diplomatic efforts lift risk sentiment and support the risk-sensitive Australian Dollar and the major.

USD/JPY reverses a dip below 156.00 as focus shifts to BoJ

USD/JPY is reversing a brief dip below 156.00 in the Asian session on Thursday, looking to snap a three-day winning streak to a nearly two-week top set the previous day. The US Dollar pauses following the post-Fed rally to seven-week highs, while a more hawkish repricing of the BoJ's policy normalization path supports the Japanese Yen. This keeps the pair's upside limited, with the focus now shifting to the BoJ policy decision due on Friday.

Gold: Upside appears capped by $4,400

Gold climbs sharply and clinches fresh weekly peaks on Thursday, although the bull run seems to have met some initial hurdle around the $4,400 zone per troy ounce. The yellow metal’s rebound reverses three daily declines in a row and follows the modest retracement in the US Dollar as well as another negative performance of crude oil prices.

BoE recap: A cautious stance amid rising inflation risks

The Bank of England left Bank Rate unchanged at 3.75% but delivered a distinctly hawkish message as its inflation outlook deteriorated sharply.

One hike down, more to come? The Fed’s new rate path says yes

The Federal Reserve (Fed) raised its Fed Fund Target Range (FFTR) range by 25 basis points to 3.75%-4.00% in a unanimous decision, saying the move would support a timelier return to its 2% inflation goal.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.