US\u2013Iran tensions have risen again, elevating risks to energy infrastructure and tanker movements through the Strait of Hormuz, while Tehran has also cautioned shipping companies against using routes that bypass Hormuz. After the collapse of a US\u2013Iran ceasefire memorandum signed in June, tanker traffic through the strait has fallen sharply. President Trump said the US would target Iranian bridges and power infrastructure if Iran attacks vessels transiting Hormuz, and Iran responded that it would strike power facilities across the Gulf if its own energy assets are hit.<\/p>\n
Supply concerns have also spread into the Red Sea, where the Houthis have reportedly attacked two Saudi oil tankers, putting traffic through the Bab el-Mandeb Strait under threat. The route has become a more important alternative corridor for regional oil exports, which increases the market sensitivity to any disruption. Brent has rebounded above USD90\/bbl this month, reflecting the higher perceived risk of a wider global energy shock.<\/p>\n
With Brent crude surging past $90 per barrel this July, we are seeing a significant geopolitical risk premium priced into the energy markets. The escalating friction between the US and Iran, alongside threats to the Strait of Hormuz, makes near-term supply highly unpredictable. We advise derivative traders to prepare for heightened price swings in the coming weeks as these vital transit choke points face unprecedented pressure.<\/p>\n
Historically, the Strait of Hormuz handles roughly 20 million barrels of oil per day, which is about one-fifth of global liquid petroleum consumption. To hedge against sudden supply disruptions, we recommend buying out-of-the-money Brent call options to capture rapid upward spikes. Implied volatility in oil options is rising fast, and we expect the crude oil volatility index to mimic past crisis spikes of over 30%.<\/p>\n
We also suggest utilizing calendar spreads to exploit the deepening backwardation in the futures curve, where near-term prices are trading at a steep premium to deferred months. By buying front-month contracts and selling further-out months, we can benefit from the immediate market tightness. This approach limits our downside if the geopolitical premium suddenly dissipates.<\/p>\n
Finally, we must anticipate that exchanges will hike margin requirements, which historically rise by 15% to 25% during major energy shocks. Traders should lower their leverage and maintain higher liquidity cushions to withstand sudden intraday margin calls. Keeping position sizes modest will ensure we remain positioned to capture these highly profitable, yet volatile, market swings.<\/p>\n\n\n\n