Rabobank said Iran’s control of the Strait of Hormuz, alongside ongoing regional tensions, is keeping risks elevated for oil and wider energy markets. It said extended disruption could damage energy supply chains and economies, even without further escalation. The report referred to comments about possible de-escalation and a peaceful resolution, while noting that Iran has continued missile strikes on Israel and Israel has continued its military campaign. It also said several Gulf Cooperation Council (GCC) members have signalled willingness to join the fight against Iran.

Strait Of Hormuz Disruption Risks

It said disruption in the Strait of Hormuz is affecting energy exports, which may increase the GCC’s incentive to push for the waterway to reopen. It added that Iran has threatened further retaliatory strikes against targets in neighbouring countries. Rabobank said escalation may have been avoided for now, but Iran still has full control of the Strait of Hormuz. It said that if Iran can carry out pinpointed strikes, sailing through the area could become too dangerous. It said market sentiment shifted as energy prices rebounded from the previous day’s lows. It added that equity traders became more cautious after an earlier social media post. The ongoing situation with Iran effectively controlling the Strait of Hormuz is creating serious risk. Roughly 21% of global petroleum liquids consumption moves through this single point, and this vulnerability is now being priced back into the market. We are seeing Brent crude has climbed back to over $95 a barrel, erasing the brief optimism from last week.

Positioning For Energy Price Shocks

This environment suggests we should position for further price shocks in the energy sector. Buying near-term call options on WTI or Brent crude futures offers a direct way to profit if the situation escalates suddenly. This strategy provides upside exposure to supply disruptions while keeping the initial cost, or risk, defined. We should remember the sharp market reaction during the initial flare-up in late 2025. Back then, we saw oil prices jump nearly 15% in a single month on missile strike headlines alone, catching many traders unprepared. The current standoff feels similar, where a lack of major news doesn’t mean the underlying threat has diminished. The broader market’s fear gauge is reflecting this sustained tension. The VIX index has been holding stubbornly above 22, a clear signal that option traders are pricing in higher potential for sharp market moves. Purchasing VIX calls could serve as a valuable hedge against a geopolitical shock that spills over into general equity market panic. For our equity positions, we should consider protective put options on the S&P 500. Sectors highly sensitive to fuel costs, like transportation and airlines, are particularly exposed to an energy price spike. Hedging these specific industry ETFs seems like a prudent move as long as passage through the Strait remains a prohibitively dangerous endeavour. Create your live VT Markets account and start trading now.

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