Oil traders are scrambling to protect positions as the market posts its strongest start to a year since 2022, driven by supply shocks and sanctions that have upended expectations of a glut. The rush to hedge comes amid mounting fears of renewed US military action against Iran, which could further tighten global crude supplies.

Supply disruptions and geopolitical tensions have sent oil prices surging, catching many traders off guard after forecasts predicted oversupply would keep prices subdued. The sanctions against major producers and the threat of conflict in the Middle East have created a perfect storm of uncertainty, forcing market participants to reassess their risk exposure.

With the US-Iran relationship remaining volatile, traders are increasingly turning to options and futures contracts to shield against potential price spikes. The hedging activity reflects growing anxiety about how quickly geopolitical events could transform the market's supply-demand balance, particularly given the fragile state of global oil infrastructure.