Traders see little chance the Iranian blockade ends soon

A US announcement by 31 October is priced at 19% and falling

In one line: Washington will not declare the Iran blockade lifted or paused before 31 October, and even 19% gives a quick reversal too much credit.

The contract on a US announcement ending the Iranian blockade by 31 October fell to 19% on 4 Oct. That is down 20 points since its 7-day high of 39% on 28 Sep. The price jumped to that high from 27% on 27 Sep, then gave back the whole gain and more. It fell another 2.0 points in the last 24 hours.

The other contracts in the event draw the same shape. An announcement by 15 October trades at 11%, and one by 31 December at 53%. Traders give an end to the blockade slightly better than even odds this year, but they place most of that chance after October.

The late-September jump has gone, and the price now sits below where it began. Over the 7 days the contract is down 8 points. The rule sets a low bar: it pays on any official US announcement of the "end, termination, lifting, or suspension" of the blockade on Iranian ships and the ships of Iranian customers, made by 11.59pm ET on 31 October. A short pause would count. Traders now rate even that bar as harder to clear than they did a week ago, and the price path supports them.

The United States will not announce an end or suspension of the blockade by 31 October, and 19% still overrates the chance. The 29 Sep digest made the same call with the price at 27%. The best case against it is the rule's low bar: a pause announced for any reason would pay, and the 53% on the year-end contract shows traders expect some end within the year. An official US statement lifting or suspending the blockade before 11.59pm ET on 31 October would prove the call wrong. If the blockade holds, Iranian ships and their customers stay targeted through October, a supply risk that bears on oil, where USO rose 2.65% on Fri 2 Oct.