If the US engages in military attacks against Iran, Iran may respond by laying mines in the Strait of Hormuz. Additionally, there could be targeting of US military bases located in the Gulf region.
This situation may lead to sustained upward pressure on oil prices. The potential for conflict in this area could influence global oil markets for an extended period.
Impact of Strait of Hormuz Disruption
What this means is that any aggressive military action involving the United States and Iran could disrupt a key maritime route used to transport a large portion of the world’s oil. The Strait of Hormuz is narrow but strategically vital. A closure or restriction of this chokepoint due to mines or other hostilities would constrain global supply rather suddenly. With fewer barrels able to move out of the Gulf, buyers would likely scramble to secure inventory elsewhere, which bids up prices quickly.
We’re already seeing signs of this being priced in. Oil futures have inched higher in anticipation, not on actual supply cuts, but on the probability that such cuts may become real. That speculative momentum can extend further, especially if threats escalate without actual impairment. But if tankers are hit or routes are blockaded, then the surge becomes less speculative and more structural.
Looking at previous episodes—say the tanker incidents in 2019—we recall how even isolated maritime threats were enough to send volatility metrics surging. Now, however, with supplies tighter and interest rate expectations uncertain, risk premiums tend to hang longer. Vol traders should expect wider tails in implied distributions, particularly over the one- to three-month timeframe. It’s the sort of environment where gamma becomes expensive for a reason.
Market Sensitivity and Strategic Monitoring
From our side, we’re viewing calendar spreads as particularly sensitive here. The front end will continue reacting to headlines almost tick-for-tick, while deferred contracts may lag depending on perceptions of how long this tension might persist. There may be opportunities in structure, specifically in ratio call spreads on Brent, if we start to see open interest climbing faster in short-dated expiries.
With geopolitical sensitivity layered on top of already delicate balances in physical markets, metrics like call skew are useful. They tell us not just how high prices might go, but how many people are currently protecting against that. That’s a sentiment signal as much as anything else. When it steepens further, we might view that as a possible fade—albeit only if tensions de-escalate.
We are monitoring volume in OTC markets carefully, especially for energies correlated with Middle Eastern supply. Options linked to shipping rates, as well as distillates, are showing heightened demand for upside plays. This makes sense, as logistical blockages drive secondary effects that ripple into refined products as well.
One should also pay close attention to positioning in clean tankers and dry bulk related derivatives, as unexpected shifts there can provide a leading indicator of market reaction functions. If physical rerouting begins in earnest, those instruments will reflect stress before traditional cracks or spreads adjust.
Price behaviour across assets remains orderly, but alert. It doesn’t take much in a region this tense to change that. Timing becomes everything. What looks like a tail event one day can appear highly plausible the next. That’s not a guess—it’s what the curve is trying to tell us.
Keep visibility high. Keep scenarios updated. Watch flows as much as prices.
