Wall Street “NACHO trade” replaces TACO, the Hormuz crisis boosts oil prices

As the situation in the Strait of Hormuz continues to escalate, multiple market institutions and analysts on May 9 pointed out that Wall Street traders are using a “NACHO (Not A Chance Hormuz Opens)” trading logic to replace the previously popular “TACO (Trump Always Chickens Out)” trading model. High oil prices are no longer a one-off short-term shock, but a new market environment.

Military escalation in the Strait of Hormuz

According to media reports, on May 7, 2026 (Thursday), fighting once again broke out between the US and Iran in the Strait of Hormuz. Both sides accused the other of launching the first attack. The UAE government said its air defense system recently successfully intercepted missile and drone attacks from Iran. A US military statement confirmed that it attacked two Iranian oil tankers attempting to break through the blockade, rendering them unable to navigate.

In an interview with ABC, US President Trump claimed that the ceasefire “is still effective,” adding that the relevant military actions were “just a light tap.” Trump also warned that if Iran refuses to reach a peace agreement, the US will carry out strikes at a “higher level.”

Oil prices, shipping insurance rates, and crude oil inventory data

Based on data from eToro analyst Zavier Wong, shipping war insurance premiums in the Strait of Hormuz rose at one point to 2.5% of the hull’s value in March 2026, compared with only about 0.1% before the conflict. Although they have recently come down somewhat, they are still roughly 8 times the pre-conflict level.

Brent crude has retreated from its late-April 2026 peak of $126, but remains more than 38% above the high before the escalation of the Middle East conflict. On May 9, 2026 (Friday), it stayed above $100.

According to JPMorgan Chase’s latest report, global commercial crude oil inventories are expected to approach “operating pressure levels” in early June 2026. At that time, the market will rely on new supply, or be forced to use storage facilities with the lowest inventory needed to keep infrastructure operating—though the latter carries risks of damaging oil-supply infrastructure.

RBC Capital Markets data shows that, under the oil price shock, the industries with the highest share of oil costs in operating expenses are as follows:

Water transport: about 40% of operating expenses

Air transport: about 25%

Chemical, postal express, rubber and plastic products: all about 20%

Bond market signals and Fed rate-cut room

Aviva Investors senior economist Vasileios Gkionakis said that short-end interest rates have been repriced meaningfully again, flattening the yield curve. He noted that if the Strait of Hormuz remains closed long-term, the world could face both a more persistent inflation shock and recession risk at the same time, which would further compress the Federal Reserve’s room to cut rates.

State Street Global Advisors said that both TACO trading and NACHO trading are playing out simultaneously in the current market. Although energy prices are high, the S&P 500 index is still holding at a high level in Q2. Deutsche Bank data shows that in the current quarter, about 85% of US companies’ earnings beat expectations, clearly above the historical average level—providing earnings support for US equities.

State Street also added that if high oil prices persist, gold will find it hard to break through $5,000 steadily. Conversely, if the Strait of Hormuz reopens and oil prices fall back to around $80, gold is likely to once again challenge $5,500.

Frequently asked questions

What is the definition of NACHO trading, and what is the background for it replacing TACO trading?

NACHO (Not A Chance Hormuz Opens) trading refers to the market’s view that the Strait of Hormuz is unlikely to restore passage in the short term, replacing the TACO (Trump Always Chickens Out) trading logic—which assumes that Trump’s hardline stance will eventually soften. On May 9, 2026, eToro analyst Zavier Wong said that NACHO trading represents the market giving up expectations for a quick resolution of the situation.

What does JPMorgan Chase’s latest warning about global crude oil inventories say?

According to JPMorgan Chase’s latest report, global commercial crude oil inventories are expected to approach “operating pressure levels” in early June 2026. If new supply is insufficient, it may be forced to use the minimum inventories needed to run infrastructure operations, which carries risks of damaging oil-supply infrastructure.

Which industries are most directly affected by the Hormuz crisis?

According to RBC Capital Markets data, the industries most affected by the oil price shock are water transport (oil costs account for about 40% of operating expenses), air transport (about 25%), and chemical, postal express, rubber and plastic products (each about 20%).