After some rumored progress late last week between the U.S. and Iran, the U.S. and Israel launched strikes across Iran, and Iran retaliated by launching strikes at U.S. positions across the Middle East. Commodity prices are sure to spike, but what happens next is unknown after Supreme Leader Khamenei has been confirmed dead.

There are three scenarios that we see playing out after Iran has said the Strait is “practically closed” and has vowed retaliation. Below we walk through those scenarios, review the importance of the Strait of Hormuz to global Energy markets and review some potential winners and losers within Energy credit.

For reference, geopolitical tensions with Iran have strongly supported prices this year, with WTI increasing ~$10 to $67 over the first two months of the year. The attacks over the weekend seem likely to push prices into the mid-$70s. From here, they could re-trace gains with OPEC+ announcing production increases over the weekend or could rally into the triple digits.