Most Asian equity indices fell on Monday after US–Iran peace talks ended without an agreement, and President Donald Trump said the US military will enforce a blockade in the Strait of Hormuz. Japan’s Nikkei 225 fell 0.8%, South Korea’s KOSPI dropped 0.85%, and Hong Kong’s Hang Seng slid 1.16%, while China’s Shanghai Composite was almost flat.
European stock futures were mixed, and US futures pointed to a lower open on Wall Street. Oil prices rose again after Trump said the US would block all vessels from Iran from 10:00 Eastern time (14:00 GMT) on Monday, with the move aimed at pressuring China, the main buyer of Iranian oil.
Markets Focus On Strait Of Hormuz Risk
Trump said he did not care if Iran returns to talks, while a two-week ceasefire that began last Wednesday remains in place. This reduced further falls in equities.
Iranian authorities said a Strait of Hormuz blockade would breach the ceasefire, and the Revolutionary Guard said military vessels approaching the area would be “dealt with severely”. With a light economic calendar on Monday, Middle East updates are expected to drive markets.
We remember the market reaction in 2025 when the US-Iran peace talks collapsed and the Strait of Hormuz blockade was enforced. That event sent a shockwave through equity markets and caused a significant spike in oil prices. The subsequent weeks were defined by extreme volatility as markets priced in the risk of a wider conflict.
The blockade last year pushed Brent crude prices past $110 a barrel by the summer of 2025, feeding a surge in global inflation that central banks are still battling today. We saw the CBOE Volatility Index (VIX) consistently trade above 30 during that period, a stark contrast to the relative calm of early 2025. Maritime insurance premiums for passage through the Gulf tripled, disrupting supply chains far beyond just the energy sector.
Trading Ideas For Fragile Stability
As of today, April 13, 2026, the situation has stabilized but remains a key source of underlying risk. Tensions have eased following diplomatic efforts late last year, with oil now trading closer to $85 per barrel. The VIX has settled back to around 18, suggesting traders are less fearful of an immediate shock.
Given this backdrop of reduced but persistent tension, traders should consider strategies that benefit from this fragile stability. Selling out-of-the-money put credit spreads on broad market indices like the S&P 500 could capture premium from the remaining volatility. This strategy profits from time decay and sideways market movement, but requires defined risk management in case of a sudden flare-up.
For direct energy exposure, the implied volatility in oil options remains elevated compared to historical averages. Purchasing long-dated, out-of-the-money call options on oil ETFs like USO offers a low-cost way to hedge against a potential new conflict. This provides significant upside exposure while strictly limiting the capital at risk.
We must also watch for signs of renewed risk-off sentiment, which would benefit safe-haven assets. During the peak tensions in 2025, the Japanese Yen and US dollar saw substantial inflows. Any breakdown in the current diplomatic quiet would likely see a repeat of this flight to safety, creating opportunities in currency derivatives.
