Rabobank said reports of progress towards a US-Iran understanding have not eliminated risks around the Strait of Hormuz, as only a brief memorandum has been agreed and core details remain unresolved. The bank pointed to conflicting expectations for when flows could normalise: one US official suggested 1–2 weeks to get energy moving again, while maritime experts have discussed 40–50 days. Even then, it could take weeks for cargoes to reach end-markets if an exodus of trapped vessels begins, although three Iranian oil tankers and two ships carrying essential goods reportedly passed the US naval blockade this morning.
Iran has said ships can transit Hormuz freely during a 60-day negotiation period with the US, but after that it would impose de facto tolls, a position Washington opposes. Rabobank argued this timing creates operational uncertainty for crude carriers weighing whether to re-enter the route once they exit. It also flagged the risk of a breakdown within months if Tehran does not secure promised benefits, which could weaken incentives to keep the passage open while Gulf Cooperation Council states develop alternative supply chains.
Uncertainty and Volatility in Oil Flows
We see the market reacting to headlines about a US-Iran understanding, but the details suggest high uncertainty for oil flows. Conflicting reports put the reopening of the Strait of Hormuz anywhere from two weeks to nearly two months away. This discrepancy in timelines alone is a major source of potential volatility.
The stakes are enormous, as roughly 21% of global petroleum liquids consumption passes through this single chokepoint, according to the U.S. Energy Information Administration. With Brent crude currently hovering around $84 per barrel, any actual disruption could cause a significant price spike. We believe the current calm in the market is fragile and fails to price in the true risk of a setback in negotiations.
Historically, geopolitical shocks in the region have led to sharp, sudden price increases. For instance, the drone attacks on Saudi Arabian oil facilities in September 2019 caused Brent crude futures to surge by nearly 15% in a single day. The current situation with Iran’s 60-day deadline presents a similar, if not greater, potential for a supply-driven shock.
Trading Implications and Risks
Given this, we are looking at buying out-of-the-money call options on WTI and Brent crude futures. These options are a relatively inexpensive way to gain exposure to a sharp upward price move if the deal falters. We are specifically targeting contracts that expire in late August and September 2026, beyond the 60-day negotiation window Iran has mentioned.
The key risk is Iran’s threat to impose tolls on passage after 60 days, a move the US will certainly oppose. This creates a clear geopolitical flashpoint that could unravel the entire understanding. We think the options market is currently underpricing the probability of this specific event leading to renewed conflict.
Beyond crude oil itself, there is another angle to consider in the shipping sector. Tanker operators face a difficult choice of whether to risk returning to the strait, which could drive up war risk insurance premiums and freight rates significantly. This could create trading opportunities in the stocks of major tanker companies.
