Naval drones have been used to attack oil tankers in the Gulf since fighting began between the US, Israel and Iran. The incidents point to a new threat to shipping in the region. Iran is suspected of involvement in some attacks, and it has previously displayed naval drone systems at military events. Iran warned that oil could reach $200 a barrel, while its forces struck merchant ships on Wednesday and traffic through the Strait of Hormuz fell to a near standstill.

Escalating Threats To Gulf Shipping

In Iraq, a drone attack hit a large US diplomatic facility on Tuesday, with reports linking it to groups aligned with Tehran. An Iraqi official said oil ports have completely stopped operations, while commercial ports continue to run after an attack on a fuel tanker. WTI crude was up 2.47% at $87.38 at the time of writing. It had earlier reached $113.28, a level not seen for more than three years. We remember looking back at 2025, when naval drone attacks on tankers massively escalated the conflict in the Middle East. Iran’s warning of $200 oil and the near-standstill of shipping through the Strait of Hormuz created the exact kind of price shocks we are seeing signs of again. Those events provide a clear playbook for the market instability we should be positioning for today. Now in March 2026, with diplomatic talks breaking down last month, the market is getting nervous. The CBOE Crude Oil Volatility Index (OVX), a key measure of fear, has jumped to 48 in the last week, a significant rise from the low 30s we saw in January. This shows traders are actively buying insurance against a sudden price spike in the near future.

Market Positioning And Hedging Signals

In the coming weeks, we should anticipate traders buying out-of-the-money call options on May and June Brent futures contracts. This is a direct bet on a sharp price increase driven by a supply disruption in the Gulf. The rising cost of these options reflects the market’s growing belief that another incident is more a matter of when, not if. For those who believe the risk is overblown, selling bear call spreads offers a way to collect the high premiums currently available. This strategy profits if oil prices remain stable or fall, but it carries substantial risk if a true conflict breaks out. We saw many traders get burned by this exact strategy during the 2025 flare-up. We are also watching the Brent-WTI spread, which has widened to over $8, its largest gap in a year. Because Brent is a seaborne crude directly impacted by Middle East shipping lanes, traders are buying Brent and selling WTI as a direct play on the geopolitical risk. Historically, this spread has been a reliable barometer of tensions in the Strait of Hormuz. Major industrial consumers, especially airlines and shipping firms, are actively hedging their fuel costs. They are buying futures and call options to protect themselves from a repeat of the price surge seen in 2025. This defensive buying from large players is adding to the upward pressure on prices and volatility. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account