Reuters reported that Iran’s Supreme Leader ordered that near-weapons-grade uranium must remain in Iran. Reuters also reported that sources familiar with the matter said the directive reflects consensus within the Iranian establishment.
The report contrasts with Washington’s demand that Iran must give up uranium enrichment to secure a deal. The differing positions set out the current gap between the parties.
Market Reaction And Risk Sentiment
After the comments, markets moved towards a more risk-off tone. S&P 500 futures slipped to near 7,400 and the US Dollar Index (DXY) rose to near 99.25, while WTI crude climbed to $98.45.
In market terms, “risk-on” and “risk-off” describe how much risk traders accept. Risk-on tends to favour riskier assets, while risk-off tends to favour safer holdings.
In risk-on periods, shares often rise, many commodities gain, commodity-linked currencies strengthen, and cryptocurrencies can rise. In risk-off periods, bonds may rise, gold can perform well, and safe-haven currencies such as the US dollar, Japanese yen, and Swiss franc often gain.
Currencies that often strengthen in risk-on conditions include the AUD, CAD, NZD, RUB, and ZAR. In risk-off conditions, the USD, JPY, and CHF tend to strengthen.
Strategy Implications Across Assets
The directive from Iran’s Supreme Leader is creating significant market uncertainty, pushing investors to reduce risk. With the potential for a breakdown in diplomatic talks, we are seeing a classic flight to safety. This situation is putting immediate upward pressure on oil prices as traders price in a higher risk of supply disruptions.
Given that WTI crude is already pushing towards $98.45, we should consider positioning for further gains. Buying call options on oil futures or related ETFs for the upcoming weeks seems prudent, targeting strike prices above the $100 psychological level. This strategy offers a defined-risk way to profit if tensions escalate and oil continues its climb.
Global oil inventories are already tight, with recent EIA data from April 2026 showing a larger-than-expected draw of 3.1 million barrels. This limited supply buffer means any disruption from the Strait of Hormuz could cause a significant price spike, much like we saw during the geopolitical flare-ups in 2022. An increase in geopolitical risk premium is now a base case for the next several weeks.
On the equity side, the slide in S&P 500 futures toward 7,400 signals that investors are trimming their exposure to stocks. To hedge against or profit from further declines, buying put options on the SPX or SPY ETF is a direct strategy. We are seeing the VIX, a key fear gauge, already jump over 25% to close above 19, suggesting demand for portfolio insurance is rapidly increasing.
The swift recovery of the US Dollar Index to near 99.25 is a clear signal of a flight to quality. We can anticipate this dollar strength to persist, making long positions in the USD against commodity-linked currencies like the Australian and Canadian dollars attractive. Looking back at similar risk-off periods during 2025, the AUD/USD pair saw significant declines when geopolitical tensions rose.
This dollar strength is further supported by the Federal Reserve holding rates firm at 4.5% last month, contrasting with the more cautious tones from other central banks. Therefore, a put option on the AUD/USD currency pair could be an effective way to play this policy divergence and risk-off sentiment. The growing uncertainty will likely continue to weigh heavily on currencies tied to global growth and trade.
