Rabobank said geopolitical risk is rising, driven by the risk of US–Iran hostilities. Media reports have pointed to a high chance of war. Rabobank said markets are focused on the risk of Iranian retaliation across the region.
The note highlighted recent US logistics movements and an Axios headline that put the issue back on oil traders’ radar. It said the risk balance shifted toward a US strike after markets closed on Friday.
Regional Retaliation Scenarios
Rabobank said the amount of equipment moved to the Middle East suggests any action could last for weeks, rather than ending before markets reopen on Monday. It added that possible retaliation scenarios include activity across the region, attacks via terror cells in the West (including Europe), and potential disruption in the Strait of Hormuz.
The report said these developments could move both markets and geopolitics. It added that oil and LNG prices would likely spike, and it called for a US plan to limit disruption to energy markets.
Energy markets are already pricing in a larger war risk premium. Traders may need to be ready for sudden price shocks. The risk of a US–Iran conflict is now seen as very high, and that could push Brent crude—currently around $96 a barrel—much higher in the coming weeks. This is not just distant speculation; recent logistics suggest events could unfold with little warning.
Attention is now centered on the Strait of Hormuz, a key chokepoint for global energy supplies. More than 20% of the world’s daily oil supply moves through this narrow waterway, and that share has been broadly steady for years. Any military action that threatens shipping there could quickly cut supply, creating a shock not seen in decades.
Derivatives Market Volatility
For derivatives traders, this points to a likely jump in implied volatility. The OVX, which tracks oil price volatility, has already climbed to 41. A direct conflict could push it above the highs seen during the regional flare-ups in 2025. As a result, buying crude oil call options—or volatility exposure—may become a key way to hedge, or to position for a price spike.
The 2022 market reaction to the war in Ukraine shows how fast geopolitical events can reprice energy. Brent rose above $120 a barrel as risk was rapidly re-assessed. A conflict in the Persian Gulf would likely have a more direct and sharper impact on crude.
The risk is not limited to oil. LNG prices would likely rise as well. Europe still depends heavily on LNG imports, so any threat to Qatari cargoes moving through Hormuz would directly challenge Europe’s energy security. That is why options activity in natural gas futures could increase as traders prepare for multiple outcomes.
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