Trump blockade on Iranian ships raises oil prices, lowers US stocks

Trump’s decision to blockade Iranian ships has raised oil prices and lowered U.S. stocks. The probability of Trump agreeing to Iranian oil sanction relief in April sits at 0%, with the odds of other countries conducting military action against Iran by April 15 at 9%.

Market reaction

The market for Trump’s agreement to Iranian demands is effectively dead, with no trades in the past 24 hours. Traders have priced diplomatic resolution at zero. The odds of other countries conducting military action against Iran by April 15 have climbed to 9%, up from 5% yesterday.

The April 30 market for countries conducting military action against Iran is at 22% and rising steadily. The largest move was a 3-point spike at 1:19 PM yesterday, which suggests traders expect escalation in the coming weeks.

Why it matters

With $3,427 in USDC traded daily, the April 15 military action market is moderately liquid. It takes just $447 to move the price 5 percentage points, leaving room for sharp swings on new developments. The term structure shows a 12-point gap between the April 15 and April 30 markets, which points to traders expecting a catalyst in late April.

The blockade shifts the situation from diplomacy to open confrontation. A naval blockade is itself a military action, which makes other nations’ involvement more likely. A YES share for other countries conducting military action against Iran by April 30 is priced at 22¢, paying $1 if it resolves, a 4.5x return.

What to watch

Military announcements from Saudi Arabia, the UK, and NATO. Any confirmation of strikes would move these odds sharply.

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