South Korea said it will communicate closely with the US on the matter and decide after a careful review, according to a statement from the presidential office on Sunday. In Japan, Takayuki Kobayashi, policy chief of Prime Minister Sanae Takaichi’s ruling Liberal Democratic Party (LDP), said on NHK that the threshold is “extremely high” for sending Japanese navy ships to the region under existing Japanese laws.

Allies Weigh Response To Strait Of Hormuz Security

US President Donald Trump renewed calls on Saturday for allies to help secure the Strait of Hormuz in a post on Truth Social. He wrote that countries receiving oil through the strait “must take care of that passage”, adding that the US will help “A LOT”. The report also said oil prices are expected to be impacted by developments around the Strait of Hormuz, as the US-Israel war on Iran escalates further. Looking back at the events of 2025, we see the initial hesitation from South Korea and Japan created significant uncertainty in energy markets. The calls from the Trump administration to secure the Strait of Hormuz, amidst the escalating conflict, laid the groundwork for the volatility we are managing today. This initial reluctance forced the market to price in a higher risk premium for Mideast oil shipments. That risk is now being realized, as Brent crude futures have climbed to $115 a barrel this week, their highest point in six months. We have seen recent data showing commercial shipping volume through the strait is down nearly 15% from this time last year, as war risk insurance premiums have quadrupled. This sustained disruption, which began with the conflict in 2025, continues to tighten global supply.

Positioning For Prolonged Energy Market Volatility

For traders, this means implied volatility in the energy sector will remain exceptionally high. The CBOE Crude Oil Volatility Index (OVX) is currently elevated at 58, suggesting markets are bracing for sharp price swings in the coming weeks. Therefore, strategies involving long volatility, such as buying straddles or strangles on major oil ETFs, should be strongly considered to capitalize on this instability. The ripple effects are extending beyond crude oil itself. We should be looking at options on shipping and logistics companies, particularly those not heavily active in the Persian Gulf who may benefit from diverted routes. Conversely, bearish positions on airline stocks could be prudent, as new intelligence reports of Iranian naval drills near the strait last week will likely keep jet fuel costs stubbornly high. We saw a similar pattern during the “Tanker War” of the 1980s, where targeted attacks on oil tankers in the strait caused prolonged price spikes and market anxiety. That historical precedent suggests this is not a short-term crisis but a sustained period of geopolitical risk. Traders should therefore structure their positions for a volatile environment that could persist for several more quarters. Create your live VT Markets account and start trading now.

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