US President Donald Trump is looking at ways to end the shutdown in the Strait of Hormuz, an official told the Associated Press on condition of anonymity. The report refers to efforts linked to Iran’s actions affecting shipping through the strait.
The options under review do not include ending the US blockade of Iranian ports. The approach focuses on working with allies to raise the consequences for Iran if it continues trying to disrupt the movement of energy through the waterway.
The talk of a coordinated allied response, rather than a direct de-escalation, signals that oil price volatility is here to stay. We should be prepared for sharp price swings in the coming weeks based on rumors and official announcements. Traders could consider using options straddles on oil ETFs to profit from this increased volatility, regardless of the direction of the price move.
This situation keeps the fundamental supply of oil constrained, as roughly 20% of the world’s supply is impacted by the Strait’s status. With Brent crude futures recently spiking over $110 a barrel, the futures curve has steepened into backwardation, where near-term contracts are more expensive than later ones. We believe strategies involving long front-month WTI or Brent futures contracts could be advantageous, especially as the latest EIA data shows an unexpected draw in US crude inventories.
This level of geopolitical tension is rattling broader markets beyond just energy. We saw the CBOE Volatility Index, or VIX, jump 15% on this news, a pattern we remember from the initial escalation in late 2025. Buying call options on the VIX or related ETPs serves as a direct hedge against the market-wide uncertainty this conflict is creating.
Looking at specific sectors, we anticipate continued pressure on industries sensitive to fuel costs and global trade. Put options on airline ETFs and major shipping conglomerates that rely on this route appear sensible. Conversely, we expect continued strength in defense contractors and US domestic energy producers, making their call options attractive.
