Rabobank said that rising US–Iran tensions, and the risk of military action, could affect oil and other commodity markets. It said the impact could go beyond price moves and include supply-chain disruption. The report pointed to worries that any attack could cause US casualties and reduce munition stockpiles needed for possible scenarios in Asia. It said this could mean the US is acting with confidence in its position—or taking a gamble.

Strategic Deterrence And Escalation Risk

Rabobank said the US may struggle to step back without weakening its global deterrence. It added that any stand-down could lead to more Chinese weapons reaching Tehran, which could raise future risks. The report said Saudi Arabia has increased oil output and exports as a precaution in case of an Iran-related event. It also said Iran has increased oil tanker loadings for the same reason. The article was produced using an artificial intelligence tool and reviewed by an editor. It was attributed to the FXStreet Insights Team, which selects market observations from outside experts and adds analysis from internal and external contributors. With tensions rising between the US and Iran, we should expect sharp price swings in energy markets. The risk of a supply shock is high, so long positions in crude oil derivatives are the main strategy for the coming weeks. We are acting on this by buying call options on Brent futures. Brent has already climbed 8% this month to over $95 a barrel, driven by war fears alone.

Volatility Hedging And Options Positioning

The market appears to be underpricing the chance that this conflict could escalate. That makes volatility itself an opportunity. The CBOE Volatility Index (VIX) has risen from 18 to 24 over the past two weeks, and we think it could move above 30 if direct military action happens. For that reason, buying VIX call options offers a more direct hedge against the wider market uncertainty that could follow. This risk is not limited to oil prices. It also threatens the global supply chain. If the Strait of Hormuz is disrupted—where nearly 21 million barrels of oil pass each day—freight and insurance costs could surge. Because of this, we are also considering call options on major shipping and logistics companies that could benefit from higher tanker rates. Early 2022 shows how quickly markets can reprice. When conflict began in Europe, Brent crude jumped above $120 a barrel. A threat to another key chokepoint could lead to an even faster and sharper spike. We see that earlier move as a baseline for what could happen over the next month. We also need to factor in Saudi Arabia’s contingency plans to raise production. Reports suggest it could bring more than 2 million barrels per day of spare capacity online, which may limit gains after an initial shock. This is another reason we prefer call options: the risk is defined, which helps protect us if tensions ease or if extra Saudi supply calms the market sooner than expected. Create your live VT Markets account and start trading now.

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