The U.S. blockade of Iranian ports has begun, pushing oil prices higher and increasing the risk of confrontation with China. The odds of a U.S.-Iran ceasefire by April 15 sit at 100% YES, unchanged despite the escalation, which follows failed U.S.-Iran ceasefire talks.

Market reaction

The blockade, enforced by CENTCOM, targets movements in and out of Iranian ports but excludes the Strait of Hormuz. Markets betting on military action against Iran by April 30 have moved up to 3.6%, from 3% a week ago. Traders appear to be pricing in potential retaliatory actions, particularly given China’s heavy reliance on Iranian oil.

On the diplomatic side, Trump’s likelihood of agreeing to Iranian demands in April has decreased, consistent with the U.S. hardline stance. The market for Trump’s agreement to Iranian demands has zero volume, pointing to skepticism about any near-term diplomatic resolution.

Why it matters

The order book is thin: only $261 in USDC traded daily against a $7,550 face value. Just $427 would move prices by five points, making this market vulnerable to significant swings from even modest trades. The shift from negotiations to confrontation reduces the probability of diplomatic breakthroughs.

What to watch

Buying YES at 3.6¢ in the military action market pays $1 if a strike occurs, a 27.8x return. That bet only makes sense if you expect tensions to escalate into military action before month-end. CENTCOM updates and China’s diplomatic response are the key catalysts; any shift in either could move these markets sharply.

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