TD Securities strategists Ryan McKay and Daniel Ghali set out how Middle East tensions and Iran-related outcomes could reprice oil risks. Using 75 years of geopolitical risk premia, they outline scenarios ranging from extra supply to Brent moving above $100\u2013120\/bbl with ongoing risk premia.<\/p>\n
In a \u201cNew Deal\u201d, successful US-Iran talks could ease sanctions and shift commodity flows, leading to lower energy prices. In a \u201cClean Break\u201d, a fast intervention leading to regime change could trigger an initial price move, then risk premia could fade if energy infrastructure is not damaged.<\/p>\n
In \u201cUnilateral Action\u201d, Iran or Israel acts alone, raising concerns about the Strait of Hormuz or a wider war. TD Securities expects an initial spike of $5\u201310\/bbl, similar to moves seen around the Twelve Day War.<\/p>\n
In an \u201cExpanded US Conflict\u201d, a broader US-Iran conflict raises regime survival risks and potential Strait of Hormuz disruption, with spikes of +$15\/bbl even if disruption is brief. \u201cDomestic Action\u201d that hits Iranian energy infrastructure could cut supply and exports, with a +$10\/bbl spike.<\/p>\n
In \u201cRegional escalation\u201d, wider conflict could threaten infrastructure beyond Iran, adding at least +$25\/bbl and pushing prices above $100\u2013120\/bbl.<\/p>\n
Given the recent diplomatic failures in Geneva and skirmishes near the Strait of Hormuz, the market is pricing in significant uncertainty. Brent crude is currently hovering around $88 per barrel, and we’ve seen the CBOE Crude Oil Volatility Index (OVX) climb to 35, its highest level since last fall. This setup demands strategies that account for a wide range of outcomes in the coming weeks.<\/p>\n
We see a possibility of a “New Deal” with Iran, which would bring a substantial amount of oil back to the market very quickly. To prepare for this bearish scenario, purchasing out-of-the-money puts on April or May contracts could serve as an effective, low-cost hedge. Based on tanker-tracking data from late 2025, we estimate Iran could ramp up exports by over 1.5 million barrels per day within a quarter, which would overwhelm current demand forecasts.<\/p>\n
Conversely, the risk of “Unilateral Action” between Iran or its proxies and Israel remains acute, which could cause a sudden price spike. We believe long call spreads are a prudent way to position for a potential $5 to $10 jump without taking on unlimited risk. This is similar to the price action we observed in October 2025, when a temporary disruption in the Red Sea caused a sharp but short-lived rally before fundamentals took over again.<\/p>\n
A more extreme “Regional Escalation” that threatens energy infrastructure beyond Iran would trigger a major price event, pushing Brent well above $100 per barrel. In this case, we would look to own far out-of-the-money calls, such as the $110 or $120 strikes, as a lottery ticket-style trade with massive upside. With nearly 21 million barrels of oil passing through the Strait of Hormuz daily according to the latest EIA figures, any hint of a prolonged closure would dwarf the supply shocks we saw back in 2022.<\/p>\n
With the direction of the next major move so uncertain, strategies that benefit from volatility itself are attractive. A long straddle, which involves buying both a call and a put option at the same strike price, is positioned to profit from a significant price move in either direction. This approach is well-suited for the current environment, where the outcome could just as easily be a supply glut from a new deal or a supply shock from a new conflict.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" TD Securities maps Iran conflict scenarios, from eased sanctions to regional escalation potentially pushing Brent above $120.<\/p>\n","protected":false},"author":62,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-41856","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t