Rabobank reports the Strait of Hormuz is still functionally closed on day 79, while global crude and refined product stocks are rapidly drawing down. The note says many forecasts still assume a near-term resolution in Iran and a full re-opening of the strait to shipping.
Markets are focused on whether US strikes on Iran resume. The report says renewed bombing could push physical oil prices and prompt spreads sharply higher, while stock prices could fall.
Strait Of Hormuz Market Reality
It also says Asian physical supply chains are finding it harder each day to secure oil barrels. The article adds that Scott Bessent said Iranian crude would need to return, as a US blockade moves shut-ins closer.
The article states it was produced with the help of an artificial intelligence tool and reviewed by an editor.
The functional closure of the Strait of Hormuz is now the defining market reality we must navigate. Global crude stocks are draining at an alarming rate, a trend confirmed by recent EIA data showing U.S. inventories have fallen by over 60 million barrels since February. This sustained physical tightness should be viewed as the base case for all trading strategies in the coming weeks.
With Brent futures trading around $135, the market is already pricing in a significant supply risk premium. We see extreme backwardation, where the front-month contract is far more expensive than later months, indicating a desperate scramble for immediate barrels. This structure suggests any further escalation, such as a restart of U.S. strikes on Iran, could cause an explosive move higher.
Positioning For Further Escalation
We believe long positions in front-month call options or call spreads remain prudent ways to gain exposure to a potential price spike. The CBOE Crude Oil Volatility Index (OVX) is holding stubbornly above 60, meaning options are expensive but accurately reflect the massive uncertainty. This high volatility is simply the cost of positioning for a conflict-driven outcome.
It is important to note that many central banks are still forecasting a resolution and reopening of the strait within the next quarter. This creates a major disconnect between official policy assumptions and the physical market reality traders are facing daily. We see this as a vulnerability, suggesting that official economic forecasts may be far too optimistic about containing inflation.
This situation has echoes of past supply shocks, though the duration is now a greater concern than what we saw in 2022 after Russia’s invasion of Ukraine. Back in 2025 when this closure began, few expected it to last this long, but the direct blockade of a critical chokepoint continues to severely impact Asian supply chains. Traders should be positioned for a scenario where prices surpass previous highs if a diplomatic solution doesn’t materialize soon.
