The Islamic Revolutionary Guard Corps (IRGC) said on Wednesday, during European trading hours, that it would block imports and exports in the Gulf and the Sea of Oman if a US blockade in the Strait of Hormuz against Iran’s vessels continues.
The statement followed a Washington Post report saying the US administration is planning to deploy thousands of additional troops to the Middle East in the coming days as part of efforts to increase pressure on Iran and encourage Tehran to reach an agreement with Washington.
With threats to close the Strait of Hormuz, we must anticipate a sharp increase in oil prices and market volatility. Brent crude futures have already reacted to the news, jumping 4% to over $98 a barrel in overnight trading. This initial move signals that the market is taking the potential for a major supply disruption very seriously.
The most direct strategy is to gain long exposure to crude oil prices through derivatives in the coming weeks. We are looking at buying call options on both WTI and Brent futures, specifically for contracts expiring in the next one to two months. This approach allows for significant upside potential if the situation escalates, while the risk is limited to the cost of the option.
We also see a clear opportunity in trading volatility itself. The CBOE Crude Oil Volatility Index (OVX) has surged over 15% this week, touching its highest point since the Red Sea shipping disruptions intensified in late 2025. Buying options or other instruments tied to volatility could be profitable as uncertainty is likely to remain high.
This situation echoes past events where threats to this critical waterway caused immediate market panic. We remember how oil prices spiked over 10% in a single day back in September 2019 after the attacks on Saudi oil facilities. Similarly, heightened tensions in early 2024 briefly pushed crude over the $100 mark, showing how sensitive the market is to this region.
The strategic importance of the strait cannot be overstated, making these threats highly credible. Data from the final quarter of 2025 showed that nearly 21 million barrels of oil per day, or about 20% of global daily consumption, passed through the chokepoint. Any halt to this flow would create a severe and immediate supply shock for the global economy.
Given the uncertainty, we are focusing on short-dated derivative contracts that will be most sensitive to news flow in the immediate future. Options expiring in May and June 2026 are likely to see the most activity and price movement. We will be closely monitoring reports on US troop deployments and any further statements from Iranian officials.
