Iran has recently suggested the possibility of reopening the Strait of Hormuz independent of any nuclear agreement, and the current market reflects a 60.5% probability that former President Trump will announce the lifting of the US blockade by May 31. This marks a significant decline from a 72% likelihood just one day prior, with a staggering drop from 90% within the past week.
Traders appear to still anticipate a de-escalation as the most likely scenario, but confidence is undoubtedly wavering. Notably, the market for traffic through the Strait of Hormuz has dropped from 20% to 14.5% likelihood for May 15, indicating skepticism regarding rapid normalization of operations.
The difference in trading volume between the blockade and Hormuz traffic markets is noteworthy. The Trump blockade market enjoys a daily trading volume of $95,253 in USDC with a depth of $8,975 needed to move the price by five points, which reflects robust institutional interest. In contrast, the Hormuz traffic market sees a lesser volume of $36,459 daily and has a much lower requirement of only $4,658 for a five-point shift, which suggests it is thinner and more volatile.
Iran’s shift towards prioritizing the Strait’s reopening might signal a genuine attempt to de-escalate tensions rather than just focus on the overarching nuclear negotiations. At present, YES shares on Hormuz traffic are trading at 15¢ and could yield $1 upon resolution, offering a substantial 6.67x return. Such a position clearly depends on confidence in an imminent diplomatic breakthrough, which the current market does not seem to support.
Investors should keep a close eye on Trump’s forthcoming public statements and any adjustments to US naval activities, as the next CENTCOM briefing will be critical. Additionally, any mediator involvement from Oman or Qatar could indicate that back-channel discussions are progressing toward a resolution.