Straight to $120: The TACO Trade Returns

In 30 minutes, crude oil futures will flicker to life, and this isn’t just another session. With tensions between Israel and Iran hitting kinetic levels, traders are watching the Strait of Hormuz like it’s the Nasdaq in March 2020. One headline from Tehran and the whole thing re-prices. Fast.

Straight of Hormuz

Let’s not forget where we are: the Strait of Hormuz is the world’s oil aorta. Two narrow shipping lanes, 21 miles wide, carrying nearly 20.5 million barrels of crude per day, about 30% of all seaborne oil. If the global energy market has a single point of failure, this is it.

And Iran knows that. They’ve known it for decades.

Historical Context: Tehran’s Favorite Pressure Valve

Iran has used the Strait as both shield and sword.

• 1980s Tanker War: Iranian and Iraqi forces attacked over 400 tankers, dragging in the U.S. Navy. Operation Earnest Will turned the Gulf into a Cold War naval theater.
• 2011–2012: As sanctions piled up over Iran’s nuclear program, top generals threatened a full closure. Brent jumped, premiums widened, and war-risk insurance exploded.
• 2019: In response to U.S. withdrawal from the JCPOA, Iran didn’t close Hormuz—but it did detain tankers, mine the waterway, and use drones on Saudi facilities. Brent surged $10 in a matter of hours.

Notice the pattern? Full closure isn’t necessary. Tehran only needs to look serious.

From Threats to the “Taco Trade”

Now we’re hearing traders talk about the “Taco trade” again—only this time, it’s less “Trump Always Chickens Out” and more “Tactical Action, Crude Oil.” But don’t discount the political pressure valve: a spike to $120 per barrel could put the “fear of Allah” into Trump and force his hand toward de-escalation. For Tehran, the bet is simple—weaponize oil, drive markets into a panic, and make Washington blink.

It’s the idea that Iran, boxed in by regional war and domestic unrest, will use crude prices as a bargaining chip.The setup:

• Hint at closure
• Launch a proxy drone or detain a tanker
• Send Brent up $30–$50 in a week
• Let the West sweat, while Tehran tightens its grip on negotiations

This isn’t an oil trade—it’s a geopolitical hostage negotiation wrapped in barrels.

What the Tape’s Telling Us

We’re already seeing stress on the curve.

• Brent in backwardation, meaning the market is pricing tight near-term supply.
• Options market loading up on $85–$100 calls.
• Tanker insurance costs have doubled.
• API and EIA data showing steep inventory draws.

And crude hasn’t even opened yet.

What to Watch in the Next Hour

• Any fresh intel on tanker disruptions = +3–5% price pop
• Western or Gulf military response = volatility spike
• Diplomatic olive branch = profit-taking, but elevated floor

This is the Taco moment—if Tehran pulls the lever, every macro desk from London to Singapore will pivot from equities to energy.

Final Thought: The Strait Is the Strategy

Iran doesn’t need to win the war. It just needs to raise the price of fighting it.
And that price? Measured in barrels.
Crude opens in 30. The Strait of Hormuz may already be priced for peace. But one fast boat, one drone, or one headline from the IRGC—and the whole tape rerates.

This isn’t about oil anymore.

It’s about leverage. And Iran still has plenty.

Source: https://global-macro-monitor.com/2025/06/15/straigh-to-120-the-taco-trade-returns/