China vows not to arm Iran during US-Iran ceasefire, easing escalation fears

US Defense Secretary Hegseth confirmed China’s promise not to arm Iran during the US-Iran ceasefire. Odds for the Kharg Island oil terminal being hit by April 30 sit at 7% YES, down from 12% yesterday.

Market reaction

Kharg Island oil terminal attack odds dropped as traders priced in a reduced likelihood of escalation. The Kharg Island control market fell to 3.4% YES for April 30. The US-Iran ceasefire market for April 21 dropped to 7.5% YES, down from 36% a week ago, meaning traders are less convinced the ceasefire ends abruptly.

Why it matters

China is Iran’s largest oil buyer and a major arms supplier. A Chinese commitment not to arm Iran during the ceasefire removes one of the main escalation paths, since Iranian retaliation capacity depends partly on external weapons supply. The drop from 36% to 10.5% on ceasefire termination in one week shows how quickly traders repriced this risk.

What to watch

Trade volume for the Kharg Island oil terminal markets is $2,139 in actual USDC over 24 hours. The order book is thin: just $1,809 is needed to move the April 30 market by 5 points, so a few large trades could still shift odds meaningfully. Watch for CENTCOM statements and any changes in Chinese diplomatic posture. Further Chinese mediation efforts could push these odds lower still.

At 7¢, a YES share pays $1 if it resolves, a 14x return. The market treats this as a long-shot.

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