Research preview

The Bab el‑Mandeb Strait is a narrow chokepoint that moves more than four million barrels of oil each day. When conflict threatens the flow, price dynamics in oil, related currencies and risk premia can shift dramatically. Quantitative traders can turn this geopolitical risk into systematic signals by linking the event to asset‑pricing models, liquidity measures and carry‑trade fundamentals. Geopolitical Shock and Immediate Market Reaction A sudden disruption in a major oil conduit creates a supply‑side shock that is instantly priced into futures, spot prices and related derivatives....