The Threat of Hormuz Strait Closure and Its Impact on Market Demand

Source: Trading Battle News

Following a U.S. military strike on Iran's nuclear facilities in Fordow, Natanz, and Isfahan, and Tehran’s threat to close the Strait of Hormuz, global markets are expected to experience significant developments on June 23, 2025. This article aims to forecast potential shifts in demand across stock, gold, oil, and cryptocurrency markets when they reopen after the holiday break.

1. Stock Market

• Decline in Demand for Risk Assets: Heightened geopolitical risk is likely to prompt conservative investors to shift toward cash and lower-risk assets.

• Rising Demand for Defense and Security Stocks: In contrast, companies in the defense and cybersecurity sectors are expected to see increased demand and rising share prices.

• Increased Volatility: Major stock indices may open with sharp volatility and initial sell-offs. However, institutional capital inflows may help restore some balance during the trading session.

2. Gold Market

• Strong Demand for Safe-Haven Assets: As a traditional hedge during geopolitical uncertainty, gold is expected to attract strong demand.

• Gold Price Surge: With regional risks rising and inflation potentially intensifying, gold prices are likely to see a significant uptick upon market reopening.

• Increased Inflows to Gold ETFs: Both institutional and retail investors may shift liquidity into gold-backed exchange-traded funds as a risk-hedging strategy.

• 3. Oil Market

• Increased Oil Demand: Fears over disrupted crude oil supply due to the threat of Hormuz Strait closure are expected to drive up speculative demand and physical oil purchases.

• Oil Price Rally: Brent crude and WTI prices are likely to open with notable gains.

• Surge in Derivatives Trading Volume: Oil futures and options markets are expected to see high trading activity amid rising price volatility.

4. Cryptocurrency Market

• Mixed Demand Dynamics: Cryptocurrencies are likely to experience opposing forces. Some investors may view Bitcoin as a safe alternative asset, while others may sell to raise cash amid volatile traditional markets.

• High Volatility: Crypto prices are expected to fluctuate sharply upon reopening, with potential for leveraged positions to be liquidated.

• Rising Demand for Bitcoin: Given increasing geopolitical risks, institutional interest in Bitcoin as "digital gold" is likely to grow.

Summary Forecast

Post-holiday global markets are set to undergo dramatic shifts in demand due to Middle East geopolitical tensions:

• Stocks: Risk-off sentiment with higher interest in defense-related equities

• Gold: Safe-haven demand and price appreciation

• Oil: Strong buying and rising prices driven by supply concerns

• Cryptocurrencies: High volatility and growing interest in Bitcoin as a secure digital asset

For traders and investors, understanding these trends and applying disciplined risk management will be crucial in navigating highly volatile conditions.