US President Donald Trump said a bridge in Tehran, Iran, was destroyed and warned there was “much more to follow”. He urged Tehran to “make a deal before it is too late”.
Iran’s foreign minister, Abbas Araghchi, said recent US strikes on civilian infrastructure would not make Iran back down. He said the actions “convey the defeat and moral collapse of an enemy in disarray.”
Escalation And Casualties
Iranian state media said the death toll from Thursday’s attack on the B1 bridge rose to eight, from two. It reported 95 people were injured.
Given the direct military strike in Tehran, we should anticipate an immediate spike in crude oil prices due to heightened supply-side risks. WTI crude, which has been trading in the $85-$90 range for most of this first quarter, could easily break past $100 a barrel. Traders should consider buying near-term call options on crude futures or oil-related ETFs to capitalize on this expected volatility.
We remember the market reaction after the US strike on Qasem Soleimani back in January 2020, which saw Brent crude jump over 3% in a single day. However, this current attack on civilian infrastructure feels like a more significant escalation, suggesting the price move could be more sustained this time. The key is to watch for any Iranian retaliation, especially near the Strait of Hormuz.
This level of geopolitical instability will almost certainly trigger a flight to safety in the markets. We expect gold to rally strongly as investors seek safe-haven assets, likely pushing it well past its recent highs from late 2025. Consequently, buying call options on gold futures or the GLD ETF is a prudent move to hedge against broader market uncertainty.
Market Volatility And Key Chokepoints
For equity markets, the outlook is negative in the short term, as the combination of war fears and higher energy costs will pressure stocks. The VIX, which closed yesterday near a yearly low of 14, is poised for a significant surge. Purchasing put options on the S&P 500 or call options on the VIX provides a direct way to profit from the expected increase in market fear and downside risk.
The primary physical risk remains the Strait of Hormuz, through which nearly 20% of the world’s daily oil supply travels. Any disruption there, even verbal threats from Iran, would send oil prices into another stratosphere, making out-of-the-money call options potentially very valuable. We need to price in a much higher probability of a chokepoint event than we did just last week.
