Dollar Options Most Bullish Since 2022 as War Keeps Oil Elevated

The dollar is on course for a fresh 2026 high, options markets show, as the Iran war keeps energy prices elevated.

The Bloomberg Dollar Spot Index was up as much as 0.3% in early London trading, heading for its strongest close in nearly two months. According to options metrics, traders are betting it can rise to its highest level since December.

One-month risk reversals, which measure the difference in demand between bullish and bearish dollar options versus its major peers, rose earlier to their highest level since late 2022 at 92 basis points.

The repricing comes after Brent crude jumped back above $100 a barrel. Oman has cleared all ships from its key export terminal outside of the Strait of Hormuz and two tankers were attacked in Iraqi waters.

Higher oil can quickly stoke inflation in the US and keep rate-cut expectations from shifting dovish too quickly.

Brent will average $98 in March and April before sliding back toward $71 by the fourth quarter, according to Goldman Sachs Group Inc. economists Manuel Abecasis and David Mericle . That will lift inflation enough to push back the first Federal Reserve interest rate cut of the year from June to September, they predict.

The shift implies wider rate differentials for longer, a combination that typically keeps the dollar bid, especially against energy-importing peers facing a terms-of-trade squeeze, reinforcing the greenback’s so-called petrocurrency behavior as oil drives macro pricing.