Rabobank’s Senior Market Strategist Benjamin Picton said the Iran war and threats around the Strait of Hormuz are sustaining risk for oil markets. He said Iranian retaliation could target Gulf energy infrastructure, affecting supply. He said a US decision to step back would not guarantee that Iran would allow the Strait of Hormuz to reopen. He said this could leave Iran controlling flows through Hormuz, with toll payments and possible requirements for cargoes to be priced in Chinese yuan (CNY).

Worst Case Supply Disruption Risks

He said damage to oil and gas infrastructure could push conditions towards worst-case scenarios, where energy and other commodity supplies stay restricted for an open-ended period. He said an immediate reversal in oil prices and broader risk assets is unlikely. He cited late-week measures that allowed Indian LPG cargoes to transit Hormuz, and said Iran indicated a similar arrangement may soon be reached with Japan. He said this may ease pressure in the short term, but limited transit means Asian demand-side curtailment may continue until Hormuz reopens. The ongoing conflict with Iran sustains a significant risk premium in oil markets. With Brent crude futures hovering near $115 a barrel, we see little chance of a quick snapback to the prices seen before the 2025 escalation. The market is pricing in a long-term disruption, not a temporary skirmish. Current satellite tracking shows tanker traffic through the Strait of Hormuz remains down nearly 80% from its daily average in 2024, removing close to 17 million barrels per day from the market. This prolonged throttling of supply means any damage to Gulf energy infrastructure would be catastrophic. We believe the CBOE Crude Oil Volatility Index (OVX), now trading near 65, accurately reflects this heightened risk of a worst-case scenario.

Geopolitical Control And Market Pricing

Any perceived US climbdown is unlikely as it would effectively cede control of the world’s most critical energy chokepoint to Iran. This would be a “Suez moment” for the United States, potentially ending its role as the global hegemon. For derivative traders, this means the underlying geopolitical driver for high prices remains firmly in place. The economic consequences are already clear, with the IMF last week revising its global 2026 growth forecast down by a full percentage point, citing sustained energy price shocks. A scenario where Iran enforces demands for oil payments in Chinese Yuan (CNY) would fundamentally challenge the U.S. dollar’s dominance. This adds another layer of long-term risk and currency volatility that traders must now consider. Iran’s recent allowance of some Indian and Japanese LPG cargoes is a minor conciliatory move, but it does not change the strategic reality. These volumes represent a drop in the ocean compared to the overall halted supply. We saw how Asian industrial production figures for February 2026 already showed a contraction, a direct result of this energy curtailment that will likely continue. Create your live VT Markets account and start trading now.

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