Gulf countries are considering new oil pipeline projects to bypass the Strait of Hormuz, amid concerns about Iran’s potential control of the waterway, the Financial Times reported on Thursday.
Officials and industry executives said pipelines could reduce Gulf states’ exposure to disruption in the strait, although the projects would be expensive, politically complex, and take years to complete.
Market Exposure Still High
At the time of writing, West Texas Intermediate (WTI) was up 6.10% on the day at $99.96.
We recall the talk in 2025 about building new pipelines to bypass the Strait of Hormuz, which highlighted a key vulnerability in global oil supply. As of today, April 2nd, 2026, those complex and costly projects have not significantly progressed, leaving the market just as exposed to potential disruptions in the waterway. The underlying geopolitical tensions that drove those initial discussions have not eased.
The situation remains critical, as recent data shows over 21 million barrels of oil per day still pass through the strait, representing roughly 20% of global consumption. With WTI crude currently trading around $105 a barrel, up from the $99 level seen when these concerns flared up last year, the market is pricing in a persistent risk premium. Any escalation in rhetoric or military posturing in the region could cause a sharp price spike.
For the coming weeks, traders should consider buying near-term call options on WTI or Brent crude futures to position for such a spike. The May and June 2026 contracts offer a direct way to profit from a sudden disruption, with out-of-the-money strikes providing leveraged exposure for a relatively low premium. This strategy acts as an effective hedge against sudden supply shocks.
A more risk-defined strategy would be to use bull call spreads, buying a call at a lower strike price and selling one at a higher strike price for the same expiration. This lowers the upfront cost of the position and caps the maximum profit, but it provides a clear risk-reward profile in a volatile market. It is a prudent way to express a bullish view without being exposed to unlimited risk.
Options Volatility And Positioning
Implied volatility on crude oil options is elevated, reflecting the market’s ongoing nervousness about the Strait of Hormuz. While this makes buying options more expensive, it also confirms that the potential for a large price move is widely recognized. This environment underscores the need for strategies that can capitalize on sharp, sudden price movements in the near future.
