Donald Trump told NBC News he was not ready to make a deal with Iran because the terms were “not good enough yet”. He said US strikes on Kharg Island had “totally demolished most of the island”, and added the US had not targeted “energy lines” because rebuilding would take years. He declined to say whether the US Navy would escort ships, but said the US would sweep the Strait of Hormuz “very strongly”. He said other countries would join efforts to keep the route open, and that some nations were being impeded from getting oil.

Uncertainty Around Strait Of Hormuz

He said it was unclear whether Iran had dropped mines in the Strait of Hormuz. He also said reports that Iran’s Supreme Leader was dead were a rumour. In Truth Social posts, he said the US had “destroyed 100% of Iran’s Military capability”. He urged countries including China, France, Japan, South Korea and the UK to send warships, and said the US would “help – A LOT”. Reuters reported that the Trump administration rejected Middle Eastern allies’ efforts to start diplomatic talks, citing three sources. Reuters also reported that two senior Iranian sources said Iran had turned down ceasefire talks until US and Israeli strikes end. We are looking at extreme volatility in the energy markets for the coming weeks given the uncertain military action in the Strait of Hormuz. With about a fifth of the world’s daily oil consumption passing through that narrow channel, any disruption creates massive supply-side risk. The president’s comments show a commitment to military action but an unwillingness to commit to a diplomatic solution, fueling this uncertainty.

Trading And Hedging Implications

This situation feels similar to the disruptions we saw back in 2025 after the attacks on Emirati oil facilities, when Brent crude spiked nearly $15 in a single day. Historically, during the “Tanker War” of the 1980s, sustained attacks on shipping caused severe price swings for months. The current rejection of a ceasefire by both sides suggests this conflict could have a longer duration than previous incidents. Traders should consider buying call options on Brent and WTI futures, as a full, even temporary, closure of the Strait could send prices soaring well above current levels. Brent crude has already jumped over $115 a barrel, and implied volatility in the options market is hitting highs not seen since the start of the conflict. The risk of a sudden escalation from a stray mine or drone attack makes holding short positions extremely dangerous. Beyond simple direction, the futures curve is steepening into backwardation, where near-term delivery contracts are much more expensive than later-dated ones. This reflects the market’s acute fear of an immediate supply shock. We are also seeing tanker insurance premiums for the Persian Gulf surge, reportedly increasing tenfold and adding a direct cost to every barrel leaving the region. On the other side, any surprise announcement of diplomatic talks or a sudden de-escalation would cause prices to plummet just as quickly. Therefore, buying far out-of-the-money put options could be a prudent hedge against a rapid reversal. We should also anticipate that continued high energy prices will negatively impact transportation and industrial stocks that are heavy fuel consumers. Create your live VT Markets account and start trading now.

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