The US Navy seized an Iranian tanker near a Chinese warship, and the Strait of Hormuz traffic normalization market now sits at 25% YES for a return to normal by May 31.
Expectations for normal traffic levels in the Strait of Hormuz by May 31 have dropped. The US willingness to confront Chinese military presence in the area pushed the normalization probability to 25%, down from higher levels before the incident. Warships through the Strait of Hormuz by April 30 is at 6% YES, with the UK and other nations potentially increasing naval presence.
The seizure has a small effect on UK warship deployment odds but a larger one on the Hormuz traffic market. Seizing a tanker with a Chinese warship nearby raises the geopolitical temperature and makes normalization less likely. The market is thin: $427 moves it 5 points, so expect volatility.
A confrontational US posture makes a quick resolution less probable. Traders need to account for possible retaliatory actions from China or Iran that could further disrupt traffic. At 25¢, buying YES pays $1 if traffic normalizes by May 31, a 4x return if tensions cool substantially.
Watch for CENTCOM updates and Chinese diplomatic responses. Any moves by the UK or other allies to deploy warships will also affect these markets.
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How Many Ships Transit The Strait Of Hormuz This Week Apr 6 12| Contract | Odds | Δ since publish | Volume 24h | |
|---|---|---|---|---|
| April 12 | 100% | — | — | Trade → |
| Contract | Odds | Δ since publish | Volume 24h | |
|---|---|---|---|---|
| April 30 | 7.5% | — | — | Trade → |
