The United States military said it targeted sites along Iran’s coastline near the Strait of Hormuz, Reuters reported on Wednesday. It said Iranian anti-ship missiles there posed a risk to international shipping. US Central Command (CENTCOM) said US forces used multiple 5,000-pound deep penetrator munitions. It said the strikes hit hardened Iranian missile sites along the coastline near the Strait of Hormuz.

Market Reaction And Immediate Pricing

At the time of writing, West Texas Intermediate (WTI) was down 0.31% on the day at $94.67. We see that U.S. forces have struck Iranian missile sites along the coast near the Strait of Hormuz. This action targets hardened facilities that were deemed a threat to international shipping. The initial market reaction has been muted, with West Texas Intermediate crude oil actually ticking down slightly. This price drop for WTI seems disconnected from the growing geopolitical risk and is likely due to domestic factors. The latest Energy Information Administration report showed a surprise inventory build of 3.2 million barrels at the Cushing, Oklahoma storage hub, easing immediate supply concerns in the U.S. market. This suggests the physical market is currently well-supplied, but this situation may not last. The key indicator for us to watch is not the spot price, but implied volatility. The CBOE Crude Oil Volatility Index (OVX) has already jumped over 15% to 42.5, showing that options traders are pricing in a much higher probability of sharp price swings in the near future. This divergence between the calm spot price and the nervous options market presents an opportunity.

Lessons From Prior Shipping Disruptions

We learned from the shipping disruptions in the Red Sea back in 2025 that the direct impact on oil production isn’t the only factor. During that period, we saw the risk premium on Brent crude widen by nearly $10 per barrel due to increased shipping and insurance costs alone. A direct conflict in the Strait of Hormuz would have a much larger and more immediate effect. The scale of the risk is immense, as nearly 21 million barrels of oil per day, or about 20% of global daily consumption, pass through this narrow waterway. Any significant disruption, or even the credible threat of one, could send prices soaring far beyond recent highs. This is not a risk that the market can ignore for long. Given the elevated volatility, we should consider buying out-of-the-money call options on Brent crude for May and June expirations. This provides exposure to a potential price spike while limiting downside risk to the premium paid. Strike prices between $105 and $110 offer a cost-effective way to position for a significant escalation. We should also monitor the spread between Brent and WTI crude. This spread, currently at $5.20, is likely to widen significantly if the crisis is localized to the Middle East, as international Brent prices would react more strongly than the more insulated U.S. benchmark. Trading this spread offers another way to capitalize on the developing situation. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account