Iran said it was meeting its Strait of Hormuz obligations under the Versailles memorandum of understanding, after projectiles hit a Qatari liquefied natural gas carrier and a Saudi tanker in the waterway. Tehran also linked heightened risk to shipping routes not coordinated with Iran or to vessels masking transponders, while rejecting Qatar\u2019s accusation over an attack on a vessel tied to the country. Separately, an adviser to Iran\u2019s Supreme Leader said the US would steer talks towards failure, positioning responsibility for any breakdown in advance.<\/p>\n\n
The US response came through Central Command, which said it had begun a series of intense strikes on Iran to penalise attacks on commercial shipping, describing Iran\u2019s actions as an unjustified and clear ceasefire breach. The administration also revoked the licence permitting Iranian crude oil sales, combining military action with tighter financial pressure. Brent ended about 3% higher near $74.00 a barrel and then moved towards $76.00 after hours following the licence decision, even as prices remained close to post-February lows with OPEC+ supply returning and Saudi discounts deepening. Traders are watching potential retaliation, a 60-day free-passage window ending in mid-August, and whether transit volumes and war-risk premiums deteriorate.<\/p>\n\n
We see the market pricing in a minor skirmish, with Brent crude pushing toward $76 a barrel. This reflects a small “incident premium,” not the “closure premium” that would follow a full-scale conflict. The current price does not fully account for the risk of a major disruption to the nearly 21 million barrels passing through the Strait of Hormuz daily.<\/p>\n\n
Our view is that volatility is underpriced relative to the geopolitical risk. The CBOE Crude Oil Volatility Index (OVX) has risen to around 45, but this is far from the peaks above 60 seen during the 2019 attacks on Saudi facilities, which caused a historic price spike. Given that about 20% of the world’s daily oil supply is now directly threatened, current options pricing appears too complacent.<\/p>\n\n
Our strategy for the coming weeks is to buy cheap, out-of-the-money call options on Brent crude for September and October 2026 delivery. We are specifically looking at strikes around $85 or $90, which offer significant upside if Iran retaliates or begins charging transit fees in mid-August. This is a low-cost way to position for a repricing event that the broader market is currently discounting.<\/p>\n\n\n\n