Iran shuts critical oil shipping lane — load up on oil ETFs before prices spike
Thesis
The Strait of Hormuz is the single most important oil chokepoint in the world — roughly 20 million barrels a day flow through it. When a major military force announces its closure, oil markets react first and ask questions later because any actual disruption creates an immediate physical shortage. Energy ETFs and oil futures typically gap up and continue rallying for days as hedge funds and commercial buyers scramble for supply. Even if the closure proves temporary, the geopolitical risk premium tends to stick.
Strategy approach
Build a momentum strategy that enters long USO on D1 when the headline news fires and price gaps up >3% on volume >200% of the 20-day average. Hold for 10 trading days. Exit on a 6% trailing stop or if WTI crude (CL=F) closes below its 5-day low.