How Iran Has Effectively Closed the Strait of Hormuz

The Strait of Hormuz closure represents a historically extreme supply disruption, with approximately 20% of global oil supply and ~30% of LNG transit at near-standstill. Price has already surged ~50% from $65.21 to $98.23 in roughly 6 weeks, absorbing the initial shock premium. The critical analytical question is duration: sustained closure beyond 60-90 days historically drives prices toward demand-destruction thresholds near $120-130, approaching the 2022 peak of $123.7. Monthly σ of 2.62% dramatically understates current realized volatility during a geopolitical shock of this magnitude. The risk/reward from current levels is less favorable than entry in the $65-75 range, but the ongoing catalyst justifies maintained long exposure with disciplined stops. Coordinated SPR releases and demand destruction at $100+ are the primary countervailing forces keeping upside from being unambiguous. ⚡ DEEP SONNET: Staggered entry: 50% position at current $96-99 range, remaining 50% on any pullback to $90-93 support retest. Avoid chasing above $101 without prior close confirmation above $100. | TP:18% SL:10% | 4-10 weeks | Risk:HIGH — Four distinct risk vectors: (1) Diplomatic breakthrough or ceasefire could trigger a 15-20% gap-down within hours; (2) Coordinated IEA Strategic Petroleum Reserve releases historically suppress price spikes by $10-20/barrel; (3) Demand destruction dynamics become self-reinforcing above $100 sustained; (4) Position is entering crowded long territory after a 50% rally in 6 weeks, creating violent short-squeeze reversal potential on any negative headline. Geopolitical escalation is a double-edged sword — broader conflict could simultaneously spike prices further before crashing on demand collapse. | Sizing:STANDARD