As Iran claims to have secured the Strait of Hormuz, prediction markets are lowering the odds of a US-Iran diplomatic meeting to 49% and pricing in a greater chance of escalating conflict.
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Iran Says Hormuz Safe as Oil Markets Price in 59% Chance of $110 Crude
Iran’s foreign ministry said on May 18 it has taken measures to secure shipping in the Strait of Hormuz, a critical oil chokepoint, while blaming the United States and Israel for military actions that have heightened regional tensions and sent energy prices soaring.
"Naturally, once the current state of insecurity is resolved, navigation conditions in the Strait of Hormuz will return to normal,” Iranian President Masoud Pezeshkian was cited as saying by the semi-official Mehr news agency, adding that Iran remains committed to a diplomatic resolution.
The statement comes as prediction markets show a decreasing likelihood of a US-Iran diplomatic meeting by June 30, with odds falling to 49%. Meanwhile, the May 2026 contract for WTI crude oil reflects a 59.5% probability of reaching $110 a barrel, a sign of sustained geopolitical risk that has already pushed Brent crude up approximately 50% since the conflict began.
The divergence between Iran's assurances and market pricing highlights a critical impasse for the global economy. With G7 finance ministers discussing further sanctions and former U.S. President Trump reviewing military options, the risk of the conflict re-escalating from a stalled diplomatic track into open conflict remains high, threatening one of the world's most vital energy arteries.
Iranian Foreign Ministry spokesman Baghaei's statement on May 18 attributed the current tensions to "US and Israeli military actions" that violate international law. He confirmed that communications with Oman are ongoing and that proposals from mediator Pakistan are under review. This diplomatic maneuvering occurs against a tense backdrop. In a recent interview, former U.S. President Donald Trump warned Iran could face a “much harsher blow,” and he is expected to meet with his national security team to discuss military operations, according to Axios.
The markets are reflecting this skepticism. The probability of a permanent peace deal between Israel and Iran by June 30, 2026, has dropped to just 12.5%, according to prediction market data. China, a key player, has urged for the strait to be reopened to shipping as soon as possible, even as it criticizes the US-Israeli actions against its Iranian ally. The situation leaves the White House facing the challenge of how to reopen the strait and lower energy prices ahead of midterm elections.
This article is for informational purposes only and does not constitute investment advice.
[1] Iran says it has taken measures to ensure regional shipping safety[2] Trump returns from China, Hormuz talks stall[3] As Hormuz crisis rattles the world, eyes are on another key waterway[4] G7 meets in Paris as Iran plans Strait of Hormuz transit fees amid tensions[5] Trump hints at military action against Iran, impacting peace deal odds
