NEW YORK, March 18, 2026, 2:18 PM EDT
Wall Street’s fear gauge pushed higher Wednesday, ending a three-day slide as investors reacted to reports of strikes on a major Iranian gas field and a hotter-than-expected U.S. wholesale inflation reading. The Cboe Volatility Index, or VIX, added almost 3%, reaching 23, MarketWatch reported.
The market’s on edge, split between bracing for a quick inflation jolt or a wider pullback in risk appetite. Reuters columnist Mike Dolan points out the U.S. one-year inflation swap—a key read on where traders see inflation headed in the next year—has jumped to 3%. But out further, the five-year, five-year forward inflation swap is down at 2.35%. For now, the message from traders: the current price surge might sting, but they’re betting it won’t stick around.
The split is evident in the options market. Oil call options — essentially wagers on prices climbing — are drawing much heavier interest than puts, according to Mandy Xu, head of derivatives market intelligence at Cboe. Xu wrote Monday that the OVX crude-oil volatility index spiked 15 points to 120 last week, a level not seen since the pandemic’s initial turmoil in 2020.
ETF Database ran a warning Wednesday from Horizon Investments. Mike Dickson urged investors to “be ready for more wild swings in oil and gas prices.” He pointed out that OVX had jumped to 108—triple where it stood at the year’s open—while the VIX had risen much less, which he argued showed U.S. equities were still only partially pricing in the energy shock. Horizon
By Wednesday afternoon, the gap stubbornly remained. The Cboe’s VIX page pegged the index at 23.24, a notch higher than Tuesday’s 22.37 finish—evidence traders were shelling out more for protection against S&P 500 volatility. The VIX, tied to S&P 500 options, serves as the market’s go-to gauge for expected stock turbulence.
Oil and inflation were already leaving their mark on equities. Brent hovered close to $110 a barrel, according to Reuters, with U.S. crude just shy of $98. The VIX jumped 1.05 points, landing at 23.42. Angelo Kourkafas, senior global investment strategist at Edward Jones, pointed to the PPI figures as evidence of stubborn price pressures even ahead of the run-up in oil, adding that the latest energy spike is making things tougher for the Fed.
Capital is chasing the trend. So far this month, global energy-sector funds have attracted $2.1 billion, setting up March for the biggest inflows since 2014. Among the funds pulling in money: Xtrackers MSCI World Energy UCITS ETF and iShares S&P 500 Energy Sector UCITS ETF. “Geopolitical risk trade,” is how David Russell at TradeStation put it. Reuters
The trade can flip quickly. Earlier this month, Reuters noted investor attention was shifting to the prospect of a brief conflict—and the timeline for flows in the Strait of Hormuz to return to normal. On Wednesday, RBC Capital Markets described the event as more of a black swan for oil than for other assets, but warned U.S. equities could still drop 20% if volatility keeps rippling outward.
