The ProShares UltraShort Bloomberg Crude Oil ETF (SCO) experienced a sharp pre-market plunge of 5.79% on Monday. As an exchange-traded fund designed to deliver daily investment results that correspond to twice the inverse of the daily performance of Bloomberg crude oil, its significant decline directly reflects a substantial surge in underlying crude oil prices.

The dramatic move was triggered by escalating geopolitical tensions in the Middle East, which reignited severe supply concerns. The key catalyst was U.S. President Donald Trump's rejection of Iran's latest long-term peace proposal, which he termed "completely unacceptable." This development severely dimmed hopes for a quick resolution to the conflict that has led to a de facto dual blockade of the critical Strait of Hormuz, a chokepoint for 20-30% of global oil and gas transportation.

Consequently, the international crude oil benchmark, Brent futures, surged violently toward $105 per barrel in early Asian trading. Market focus has shifted from the recent AI investment frenzy to the "NACHO" (Not A Chance Hormuz Opens) trading theme, as traders price in the risk of a prolonged strait blockade. Analysts from Citigroup and Morgan Stanley have warned that even an orderly reopening would not lead to an immediate supply recovery, with Saudi Aramco's CEO suggesting the oil market might not normalize until 2027 if shipping restrictions persist. This surge in oil prices pressures inverse ETFs like SCO and raises broader inflation concerns, potentially constraining central banks' ability to cut interest rates.