‘NACHO’ Trade Returns: Oil Prices Climb On Renewed Tensions In Hormuz Strait

• NACHO, or “Not A Chance Hormuz Opens,” is on traders’ radar amid escalating conflict in the Strait of Hormuz. 
• “NACHO is an acknowledgment that higher oil isn’t a temporary shock to trade around, it’s the current market environment,” Toro market analyst Zavier Wong reportedly told CNBC.
• The U.S. and Iran exchanged fire in the Strait on Thursday, even as President Trump insisted that the ceasefire between the two countries was still in effect.

Oil prices climbed higher in the overnight session heading into Friday as renewed tensions in the Strait of Hormuz have brought the “NACHO” acronym, or “Not A Chance Hormuz Opens,” back into focus.

Brent crude futures expiring in July were up about 0.44% at the time of writing, trading above the $100 a barrel mark. Meanwhile, WTI crude futures expiring in June were up about 0.15%, trading at $94.95 a barrel.

The “NACHO” buzzword is catching on again after the U.S. and Iran exchanged fire in the Strait of Hormuz on Thursday, stoking concerns about the ongoing blockade in the important energy corridor that has disrupted global supply and led to wild fluctuations in oil prices since the start of the war.

“It’s essentially the market losing hope in the chance of a quick fix,” eToro market analyst Zavier Wong reportedly told CNBC. “NACHO is an acknowledgment that higher oil isn’t a temporary shock to trade around, it’s the current market environment.”

Oil Supply Tightens

Shell CEO Wael Sawan has said the oil market is facing a shortage of nearly 1 billion barrels amid the conflict.

“The hard facts are we are, we have dug ourselves a hole of close to 1 billion barrels of crude shortage at the moment, either because of locked-in barrels or unproduced barrels, and of course, that hole is deepening every single day. The journey back will be a long one. And you’re beginning to see that on the overall refining complex,” he said in the latest earnings call with investors.

Earlier, the International Energy Agency also noted that the oil market is facing its biggest supply disruption in history.

The Federal Reserve Bank of Dallas has suggested that a prolonged closure of the Strait could send crude oil prices above $167 in late 2026, and potentially to $200 per barrel.

The United States Oil Fund (USO), which tracks the price of WTI crude oil, has rallied more than 64% since the war started. The ProShares Ultra Bloomberg Crude Oil (UCO) energy exchange-traded fund has gained more than 71% in the same time.

Is A Peace Deal Unlikely?

Markets that were hoping for faster peace negotiations in recent weeks are now seeing those assumptions challenged by the latest developments in the region.

The U.S. and Iran both accused the other of starting the conflict in the Strait on Thursday. The U.S. military said that it had intercepted "unprovoked" Iranian attacks on three American ships in the critical waterway, while Iran has said that the U.S. violated ceasefire agreements first.

“A normal Country would have allowed these Destroyers to pass, but Iran is not a normal Country. They are led by LUNATICS, and if they had the chance to use a Nuclear Weapon, they would do it, without question — But they’ll never have that opportunity and, just like we knocked them out again today, we’ll knock them out a lot harder, and a lot more violently, in the future, if they don’t get their Deal signed, FAST! Our three Destroyers, with their wonderful Crews, will now rejoin our Naval Blockade, which is truly a ‘Wall of Steel,’” U.S. President Donald Trump said in a post on Truth Social.

However, according to a report from ABC News, Trump clarified that the ceasefire still holds, adding that the strikes were “just a love tap.” Meanwhile, Iran has said that it is still reviewing the U.S. proposal.

Meanwhile, U.S. equities have been rising in Thursday’s overnight trade. t the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 0.33%; the Invesco QQQ Trust ETF (QQQ) rose 0.52%; and the SPDR Dow Jones Industrial Average ETF Trust (DIA) gained 0.13%.

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