The Strait of Hormuz remains one of the world’s most strategically important shipping routes, carrying a significant proportion of global oil and LNG exports. Historically, any threat to its operation has triggered immediate concern across energy markets.
Over the last three months, however, something interesting has happened.
Despite military strikes, threats of closure, ceasefires, drone attacks and ongoing US-Iran negotiations, the market’s reaction has become increasingly muted. While geopolitical tensions remain elevated, traders appear to be placing less weight on each new development than they did at the start of the conflict.
The Early Panic
Following US and Israeli strikes on Iran in late February, concerns quickly escalated around the potential closure of the Strait of Hormuz. Within days, Iranian officials warned that shipping through the strait could be disrupted, creating fears over global energy supply.
The impact on the gas market was immediate.
UK Winter 2026/27 gas contracts surged from a pre-conflict baseline of around 80p per therm to an intraday high of 165p per therm by 19 March, more than doubling in value as traders priced in a worst-case scenario.
At that point, every headline appeared capable of moving the market significantly.
A Market Growing Comfortable with Uncertainty
Fast forward to late May and the picture looks very different.
Although tensions have continued, including military exchanges, disputed ceasefire claims and conflicting reports surrounding peace negotiations, market reactions have become far less dramatic. Events that would have moved prices sharply in March now often shift the curve by only a few pence before prices quickly settle back.
This isn’t because the risks have disappeared.
Instead, the market has become more comfortable assessing them.
As traders gain experience of the conflict’s pattern, they have developed a clearer framework for evaluating risk. Each cycle of escalation, political statements and diplomatic negotiations now generates a smaller reaction than the last.
Three Reasons Volatility Has Faded
1. The Novelty Has Worn Off
When the conflict began, uncertainty was at its highest. Every new development created fresh concerns around supply disruption.
Three months later, traders have seen repeated cycles of threats, military action and diplomatic manoeuvring. The result is a market that reacts faster but also recovers faster.
2. Political Headlines Carry Less Weight
Political statements that once caused substantial market movements are now generating a much smaller response.
Markets have become increasingly cautious about reacting to unconfirmed claims, particularly when announcements are frequently followed by contradictory statements or subsequent reversals.
3. Weather Has Helped Reduce Pressure
A relatively mild spring across North-West Europe has eased concerns around gas demand and supported storage refill programmes.
With storage levels progressing broadly as expected, buyers have been less inclined to react aggressively to geopolitical headlines than they might have during periods of tighter supply conditions.
What This Means for Energy Buyers
The key takeaway is not that geopolitical risk no longer matters.
The Strait of Hormuz remains a critical global energy chokepoint and any genuine disruption to flows would still have significant consequences for energy markets.
What has changed is the market’s ability to distinguish between headlines and actual supply threats.
For energy buyers, this highlights the importance of maintaining a disciplined procurement strategy. Reacting solely to geopolitical headlines can lead to poor decision-making, particularly when markets have already priced in much of the perceived risk.
Instead, buyers should focus on the underlying fundamentals, including storage levels, weather forecasts, supply availability and broader market trends.
Looking Ahead
As negotiations between the US and Iran continue, markets will remain alert to developments around the Strait of Hormuz.
However, the last three months have demonstrated that markets adapt quickly. What once caused panic now barely registers, and traders appear increasingly focused on whether events materially change supply fundamentals rather than simply generating attention-grabbing headlines.
For now, the market’s message is clear: uncertainty remains, but panic has faded.
