After the Strait of Hormuz Reopens, Which Trades Are the Market Betting On?

This is the 40th time Trump has said a US-Iran agreement is about to be reached.

While we have become largely immune to Trump's statements, this time the progress has been more certain than ever before.

On June 14, Pakistani Prime Minister Shehbaz Sharif announced that the US and Iran had reached a peace agreement. Trump subsequently confirmed the development, stating that the maritime blockade would be lifted and the Strait of Hormuz would be open for "free passage." Iran's Deputy Foreign Minister also said the text of the agreement had been finalized, and that all war and military operations would end immediately, including those along the Lebanese front.

Asian markets gave an immediate answer at Monday's open. Major indices in Tokyo and Seoul surged over 5% at one point, while oil prices dropped $3 per barrel, with Brent crude falling to around $84. The logic is straightforward: the market is rushing to price out the geopolitical premium that had been weighing on energy prices for the past three and a half months.

This is not yet a finalized peace agreement. The key signing is scheduled for June 19 in Switzerland. Moreover, the US and Iran have differing interpretations of the deal. The US states the strait will be freely open, while Iranian media reports say maritime traffic will be coordinated by Iran and Oman, resuming under "Iranian arrangements" within 30 days. Israel was still striking Beirut around the time of the announcement. Tough issues like the nuclear program, uranium enrichment, and sanctions relief have all been pushed into the subsequent 60-day negotiation window.

However, we can more accurately say that the conflict has largely transitioned from a military phase to a diplomatic one.

The importance of the Strait of Hormuz needs no elaboration. Before the conflict, roughly one-fifth of the world's oil and a significant amount of LNG passed through this waterway. After the US-Israeli strikes on Iran on February 28, Iran retaliated with missiles, drones, and maritime restrictions, gradually turning the strait from a "risky waterway" into a "de facto blocked waterway." For over three months, the market feared a triple lock: Iran using the strait as a bargaining chip, the US blockading Iranian ports, and the Israel-Hezbollah front making it politically difficult for Iran to compromise domestically. These three lines were intertwined, leaving no room for movement.

Now, the process of reopening the strait has officially begun. Citing energy experts, the Associated Press reported that even if the agreement takes effect, it could take months for oil and gas supply to normalize, as shipping, insurance, refineries, mine clearance, and security will all take time. Oil tankers stranded in the Persian Gulf won't set sail based on a single statement, and insurance companies and ship owners won't reset their risk assumptions back to pre-war levels overnight.

For us investors, the most important question is: which financial products can we trade now?

What is the market trading after the strait's reopening?

Over the past few months, crude oil, natural gas, shipping insurance, aviation fuel, fertilizers, and inflation expectations have all been priced with a Middle East risk premium. If the agreement is signed as planned on June 19 and vessel passage gradually resumes, these are the assets that will be affected first.

Current price data reflects this very quickly. MarketWatch reported that following the agreement news, Dow futures rose over 350 points, S&P 500 futures were up about 1%, and Nasdaq 100 futures gained about 1.6%. WTI crude fell below $81, and Brent dropped to around $83.5. Axios pegged Brent at about $84.21, while US gasoline prices have also eased from around $4.56/gallon in May to roughly $4.07.

To be more specific, what other assets can we trade?

First, short the crude oil risk premium. CBA commodity analyst Vivek Dhar, in a report cited by the WSJ, offered an assessment: if the Strait of Hormuz is no longer closed, Brent could fall back to around $80 by year-end. His key assumption is that as long as oil flow through the strait recovers to 60%-70% of pre-conflict levels, combined with non-OPEC+ supply growth and the existence of alternative pipelines, the market could re-price towards a more relaxed supply scenario. What does $80 Brent mean? It means the $15 to $20 premium added over the past three months due to the war would be systematically squeezed out.

Second, go long on airlines, cruises, and the tourism chain. This is the most direct play, driven by falling fuel costs and margin recovery. IATA had just cut its 2026 global airline industry net profit forecast from $41 billion to $23 billion, precisely because of the surge in jet fuel prices. Barron's noted that IATA expects total jet fuel costs to reach $350 billion this year. Now that oil prices have dropped from the $90-$100 range to the low $80s, airline stocks offer the greatest leverage. Key targets include the airline ETF JETS, as well as DAL (Delta Air Lines), UAL (United Airlines), AAL (American Airlines), and LUV (Southwest Airlines). For cruises, look at CCL (Carnival Corporation), RCL (Royal Caribbean Group), and NCLH (Norwegian Cruise Line Holdings). As of the close on June 12, DAL was at $83.06, UAL at $115.52, AAL at $14.98, LUV at $45.47, CCL at $29.18, and NCLH at $19.43. If oil prices remain low before the US market opens, airlines and cruises are likely to be the first sectors to see capital inflows.

Third, go long on Asian energy-importing countries. Japan, South Korea, India, and China are direct beneficiaries of lower Middle Eastern oil and gas prices. Commerzbank Research, mentioned in a WSJ report, noted that Asian currencies generally strengthened in early trading, with USD/JPY falling to around 159.93, USD/KRW to around 1505.60, and AUD/USD rising to around 0.7079. NAB Chief Economist Sally Auld suggested that lower oil prices ease inflationary pressures for energy importers like Japan, leading to a rise in Japanese 10-year government bond futures. Trading expressions could include going long on Japanese, Korean, or Indian stock indices, or on Asian importers' currencies and bonds.

Fourth, go long on bond duration and short on inflation expectations. Falling oil prices directly lower the costs of gasoline, aviation, logistics, and some food items, and also ease market concerns about central banks maintaining high interest rates. Monitor TLT, the US 10-year Treasury yield, TIPS breakeven rates, and gold. Gold's role here is unique: if the market believes the strait's reopening is real, both gold and crude oil's safe-haven premiums will fall together; if the June 19 signing fails, both will rebound. Gold acts as a hedge indicator in this trade, not a directional one.

Fifth, the repricing of LNG, fertilizers, and the chemical chain. Qatari LNG transits through the Strait of Hormuz; its restoration will lower the risk premium for Asian and European LNG, benefiting gas-consuming companies, chemical firms, and some electricity cost-sensitive industries. The Middle East is also a major supplier of fertilizers like urea and ammonia. Restored navigation means downward pressure on agricultural input costs. This line is more of a macro play, benefiting downstream chemicals and agricultural cost structures, without necessarily translating to specific individual stocks.

Polymarket's prediction markets can serve as a "probability thermometer." The "Yes" price for a US-Iran nuclear deal by June 30 is around $0.84, giving an 84% probability. "Yes" for a US-Iran nuclear deal before 2027 sits around $0.945. "Yes" for the US invading Iran before 2027 is only about $0.115. "Iran Nuke before 2027" is around $0.0735. "Will the Iranian regime fall by June 30" is about $0.0065. This set of numbers suggests: the probability of a short-term deal is high, but long-tail risks remain. The market is betting on de-escalation, but not going all in.

For a watchlist ahead of the US stock market open, the editor has compiled a few:

Tier 1, the most direct beneficiaries of lower fuel costs: JETS, DAL, UAL, AAL, LUV, CCL, RCL, NCLH.

Tier 2, beneficiaries of improved risk appetite, especially small-caps and cyclicals: SPY (S&P 500 ETF), QQQ (Nasdaq 100 ETF), IWM (Russell 2000 Small-Cap ETF).

Tier 3, companies benefiting from lower costs but with slower elasticity: FDX (FedEx), UPS (United Parcel Service), DOW (Dow Inc.), LYB (LyondellBasell).

Conversely, XOM (Exxon Mobil), CVX (Chevron), SLB (Schlumberger), HAL (Halliburton), and XLE (Energy Select Sector SPDR Fund) are likely to face short-term headwinds. These upstream and oilfield service stocks were beneficiaries of high oil prices and the war premium; as that premium is squeezed out, their thesis needs recalculation.

Finally, the risks. The biggest fear for this trade isn't that "oil prices have already fallen," but that "the agreement hasn't really been implemented yet." The June 19 signing, maritime mine clearance, falling insurance premiums, ship owners resuming transit, and the implementation of the Iran-Oman coordination mechanism – these steps all need to be verified one by one. The key signals to track: Can Brent break below $80? Can WTI break below $78? Can airline and cruise stocks maintain their gains after a strong open? Can the Polymarket probability for the Iran deal stay above 80%?

If these conditions hold simultaneously, it indicates the market is transitioning from a "war shock" to a "supply recovery."

If oil prices bounce back to $88-$90, or the Polymarket deal probability drops sharply, it's time to reduce positions in this reopening trade.