US President Donald Trump said the United States will keep its naval blockade of Iran until it reaches a deal with Tehran on Iran’s nuclear programme, Bloomberg reported on Wednesday.
Trump said he rejected a recent Iranian proposal to reopen the Strait of Hormuz, saying it would have delayed nuclear talks until later.
Market Reaction And Immediate Price Impact
Iran warned on Wednesday of “unprecedented military action” if the US continues blockading Iran-linked vessels.
Trump said Iran cannot have a nuclear weapon, while Iran said its nuclear aims are peaceful.
West Texas Intermediate (WTI) was up 7.60% on the day at $104.90 at the time of writing.
We saw this exact situation play out last year, when tensions surrounding the US naval blockade sent WTI crude prices soaring over $100 a barrel. The immediate spike of over 7% showed how quickly the market prices in geopolitical risk from the Persian Gulf. This move signaled a clear opportunity in the energy markets for those prepared to act.
Risk Hedges And Volatility Positioning
In the weeks following that 2025 announcement, the correct strategy was to gain long exposure to crude oil prices through derivatives. Buying call options on WTI or Brent futures would have been the most direct way to profit from escalating tensions and potential supply disruptions. Given that about 21 million barrels of oil pass through the Strait of Hormuz daily, any blockade represents a severe threat to global supply.
At the same time, we needed to hedge against the wider economic fallout of a sustained oil price shock. This meant buying put options on sectors most vulnerable to high fuel costs, such as airline and transport ETFs. This strategy would have protected portfolios from the demand destruction that typically follows a rapid surge in energy prices.
These geopolitical events are textbook triggers for market volatility, so positioning for a spike in the VIX was critical. When we look back at 2025, the VIX index surged from the low 20s to over 35 in a matter of days. Buying VIX call options or VIX futures offered a direct and profitable way to trade the rising uncertainty in the broader market.
This reaction was not surprising, as we only had to remember the market’s response to the 2022 Russia-Ukraine conflict, which drove Brent crude to nearly $140 per barrel. Historical precedent shows that military confrontations involving major oil producers lead to sustained price increases and volatility. Our trading models from that period confirmed that these trends often persist for several weeks.
Even now in April 2026, the market is positioned cautiously, with the latest reports from the Energy Information Administration showing global crude inventories are still 3% below the five-year average. This underlying tightness means any new supply-side threat could cause a similarly explosive price reaction. The options market is currently pricing in a higher volatility premium for energy stocks compared to this time last year.
