Iran strikes and oil blockade send crude surging — go long oil ETFs
Thesis
The combination of the US militarily striking 80 sites in Iran and simultaneously revoking Iran's oil sales waiver creates a direct supply shock in the global oil market. When a major oil producer is suddenly blocked from selling and physical conflict breaks out, oil prices typically surge fast. With stock futures diving simultaneously, capital is rotating out of risk assets and into commodities. We are connecting reports of the strikes, the oil blockade, and the subsequent 5% oil price spike to justify a momentum trade on oil ETFs while the geopolitical risk premium is expanding.
Strategy approach
Build a momentum strategy for USO on H1 or D1 timeframe. Enter long when front-month oil futures print a 10-day high on rising volume. Exit if price drops below the 10-day exponential moving average or after a 15-trading-day maximum hold. Add a 6% hard stop loss.