3 ways the Strait of Hormuz crisis could unfold — and how to position your portfolio for each

• Markets are fixated on the reopening of the Strait of Hormuz.
• President Donald Trump's decision to postpone strikes has sent stocks soaring and oil plunging.
• Morgan Stanley maps three scenarios shaping oil and investor strategy.

For global markets right now, the reopening of the Strait of Hormuz is pretty much the only game in town.

Any attacks from Iran seen threatening flows through the strait have resulted in an oil-price spike. When President Trump said on Monday that the US would postpone strikes, stocks soared and oil plunged on optimism that tankers would finally get a green light.

Everything comes back to the critical, roughly 100-mile passage, which processes one-third of the world's crude flows. The oil market has already been disrupted to a historic degree. How much longer the strait stays closed will determine how stark the fallout is.

It's created a difficult situation for investors, given how sensitive and volatile to new updates markets have proven to be. How the strait gets resolved — if it ever does — will have ramifications for all sorts of assets.

That's where Morgan Stanley comes in. Economists and equity strategists at the firm teamed up to lay out the three most plausible scenarios for what happens with the Strait of Hormuz, and how investors should allocate their portfolios in response.

Scenario 1: De-escalation

Outcome: Normal passage resumes within a month

Price forecast: Brent trades in a $80-to-$90 per barrel range in 2026, then falls to $75

Investing recommendations: MS says risk assets will outperform, and that investors should go: overweight equities, equal-weight government bonds, and underweight corporate credit and cash.

Scenario 2: Ongoing constraints

Outcome: 80% of tanker passage resumes within a month, but normalization takes a full quarter, and Iran retains influence over the situation.

Price forecast: Brent trades in a $100-to-$110 per barrel range in 2026, then falls to $80

Investing recommendations: MS says to lean into risk assets, but expect choppy trading. The firm says investors should go: overweight equities and cash, underweight government bonds, and equal-weight corporate credit.

Scenario 3: Effective closure

Outcome: The strait stays closed for months, significant demand destruction occurs, and Iran retains control.

Price forecast: Brent trades in a $150-to-$180, then eventually falls to $80

Investing recommendations: MS says bonds will outperform, and that investors should go underweight equities, overweight government bonds and cash, and equal-weight corporate credit.