The Strait of Hormuz story isn't really about whether it closes. It's about what happens to oil prices when the market revises its estimate of closure probability, even slightly. That distinction matters more than it sounds. Energy futures don't wait for events; they price scenarios. A credible threat, sustained long enough, reprices WTI before a single tanker is delayed.

The transmission chain from there is fairly direct. Oil above roughly $80 shows up in CPI within a few weeks via gasoline and transport costs. A CPI print that surprises to the upside changes the Fed's calculus, not because the Fed is wrong about underlying inflation, but because it narrows the political and data space for cuts. The Fed's rate path becomes hostage to a geopolitical option that Iran doesn't even need to exercise.

What's notable is that current WTI in the $62-70 range implies this scenario is barely priced in. Iran's brief Hormuz restriction on February 18 looked less like an accident and more like a demonstration of leverage, a reminder that the option exists and can be exercised at low cost. The market moved, then settled. But the option didn't expire.

The question worth sitting with: if even a sustained but incomplete threat is sufficient to shift Fed optionality, what's the right framework for pricing geopolitical option value into rate expectations, and does the bond market have a model for that, or is it still treating energy as a lagging indicator?