Rabobank sets a base case in which the Strait of Hormuz does not return to normal operations for up to three months, leaving supply-side damage and a large share of global oil and gas flows constrained. The bank also flags the risk of further war, delays to clearing the route and the prospect of external involvement, which together point to an energy crunch and the need to revise its macro and commodity forecasts.

An “oil-for-oil” arrangement would deliver Iran vital FX, but would also weaken its leverage once the 1,550 ships held behind Hormuz are able to leave, releasing a one-off surge of energy supply. On the operational side, demining could take longer than 30 days; some estimates put the process at six weeks, implying a mid-July reopening even under favourable assumptions. A second path would involve US allies helping reopen the strait, potentially shortening the timeline but raising the risk of retaliation and broader conflict; on May 19, NATO members were reported to be considering a role if the strait remains closed by July.

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Market Outlook And Energy Security Risks

We believe the new base case is that the Strait of Hormuz will not return to normal for up to three months, creating a sustained energy supply shock. This outlook forces us to anticipate a significant repricing of risk across energy markets in the weeks ahead. The primary response should be to position for a prolonged period of higher oil and gas prices.

This potential closure is critical because the strait is the chokepoint for nearly 20% of global oil consumption, with the U.S. Energy Information Administration reporting that over 21 million barrels of petroleum liquids passed through it daily in 2023. A disruption on this scale has no immediate remedy, as spare production capacity globally is insufficient to cover such a large and sudden shortfall. We see this as a direct threat to global energy security.

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Strategic Positioning And Historical Precedent

Therefore, we see value in establishing long positions in crude oil futures, specifically focusing on the August and September contracts for Brent and WTI. Buying call options is also a prudent strategy to capture upside potential while defining risk. The CBOE Crude Oil Volatility Index (OVX), which has been hovering in the mid-30s, is likely to spike, meaning options premiums will increase substantially very soon.

Historically, geopolitical disruptions in the Middle East have led to dramatic price increases, such as when oil prices doubled following the 1990 invasion of Kuwait. That precedent suggests current market prices are underestimating the potential for a rapid surge toward $150 per barrel if the strait remains impassable. A three-month closure would represent a far more severe crisis than many previous short-term events.

The timeline for resolution appears highly uncertain, making short-term bearish bets exceptionally risky. Demining operations could extend into mid-July at the earliest, and the potential for NATO members to get involved introduces a risk of military escalation. This dynamic suggests that any dips in energy prices should be viewed as buying opportunities.

This disruption extends beyond crude, severely impacting liquefied natural gas (LNG) flows, particularly to Europe and Asia. We are therefore also considering long positions in natural gas futures, as well as hedging strategies against broader market downturns. This includes buying put options on energy-intensive industries like airlines and heavy manufacturing that will suffer from surging input costs.