Trump, Iran under the gun with ceasefire expiring: What to know

The market is underpricing how much this extension shifts the base case from a clean geopolitical shock to a rolling uncertainty regime. That matters because the first-order price spike in oil is only part of the trade; the second-order effect is persistent friction through freight, insurance, and working-capital cycles as counterparties hesitate to commit capacity in the Gulf. The most vulnerable assets are the ones exposed to just-in-time supply chains and imported energy costs rather than direct crude beta.

Energy is still the immediate winner, but the trade is less about outright direction than about volatility and dispersion. If the corridor stays disrupted even without a broader war, shipping rates, marine insurance, and refined-product cracks can stay bid for weeks while upstream producers with low lifting costs capture the spread. Conversely, any diplomatic progress that restores vessel flow would hit the most crowded long-oil positioning fast, because the physical market is being supported as much by logistics dysfunction as by lost barrels.

The bigger underappreciated risk is emerging-market balance sheets and FX. Countries with high oil import dependence, dollar liabilities, and weak reserves can see a rapid tightening in domestic financial conditions even if global growth data do not roll over immediately; that creates a lagged hit to EM equities and local bonds over the next 1-3 months. A normalization in the Strait would relieve that pressure quickly, but until then, policymakers elsewhere are likely to keep absorbing the shock through subsidies and FX intervention, which is negative for reserves and positive for USD strength.

Contrarian view: the consensus is focused on escalation odds, but the more tradeable asymmetry may be de-escalation. The extended ceasefire creates a headline path where risk premium bleeds out in bursts if talks are merely postponed rather than failed, and those retracements tend to be larger than the initial squeeze in markets with thin physical hedging. In other words, long-vol is justified, but outright long oil may already be closer to the point where bad news is fully priced than most expect.