Sources cited by Al-Hadath on X said intense communications are under way to gradually reopen the Strait of Hormuz. The strait carries almost 20% of global energy supply.
The report said talks involve understandings to ease the blockade in exchange for a phased reopening. It added that the coming hours may bring movement for ships stranded in the strait.
Market Reaction And Asset Moves
After the headlines, WTI crude fell over 3% to near $90.00. The US Dollar Index (DXY) dipped slightly to near 97.90.
S&P 500 futures rose 0.15% to near 7,375. Market moves were described as a shift towards risk-taking after the reports.
“Risk-on” and “risk-off” describe how much risk markets are willing to take over a period. Risk-on tends to support shares, most commodities, commodity-linked currencies, and cryptocurrencies, while risk-off tends to support bonds, gold, and safe-haven currencies.
Currencies that often gain in risk-on include AUD, CAD, NZD, RUB, and ZAR. Currencies that often gain in risk-off include USD, JPY, and CHF.
With news of the Strait of Hormuz potentially reopening, the geopolitical risk premium that was built into oil prices is quickly disappearing. We see WTI crude’s drop to near $90 as just the initial reaction, with a potential slide towards the mid-$80s in the coming weeks. Looking back at 2025, oil prices were considerably more stable before the recent tensions, suggesting a path for prices to normalize further.
Positioning For A Risk On Shift
Given this outlook, we believe traders should consider buying put options on crude oil futures or related ETFs to bet on further price declines. The collapse in implied volatility that typically follows such a de-escalation also makes selling out-of-the-money call options an attractive strategy to collect premium. Recent data from the Energy Information Administration (EIA) already projected a global supply surplus for this quarter, which this reopening will only amplify.
The immediate rally in S&P 500 futures to 7,375 signals a clear shift to “risk-on” sentiment, as lower energy costs directly benefit most businesses and consumers. This relief could be the catalyst needed to break the market out of the narrow trading range we have been stuck in for the past month. The CBOE Volatility Index (VIX), often called the market’s “fear gauge,” has already dipped below 14, its lowest point this year, confirming investor confidence.
We should respond by positioning for more upside in equities, perhaps by buying call options on the SPY or QQQ ETFs. Selling put spreads is another viable strategy to take advantage of both the upward market direction and the decreasing volatility. The latest statistics on fund flows show a net inflow of over $20 billion into equity funds last week, indicating that institutional money is already moving to anticipate this rally.
The U.S. Dollar Index’s decline reflects the unwinding of safe-haven trades, which should boost commodity-linked currencies that thrive in a “risk-on” environment. Currencies like the Australian Dollar (AUD) and Canadian Dollar (CAD) are particularly well-positioned to gain against the greenback. Australia’s recent trade surplus, which beat forecasts by hitting a record high, provides a strong economic backdrop for the AUD to appreciate.
Therefore, we see an opportunity in taking long positions in the AUD/USD and short positions in the USD/CAD currency pairs using futures contracts. Buying call options on commodity currencies also provides a defined-risk way to participate in their expected strength. Historically, we saw a similar dynamic following the resolution of supply chain issues in 2025, where the Canadian dollar strengthened by over 3% in the following two months.
