Good morning! We continue to hear rumors that Trump's preferred strategy is to keep the double blockade on the Strait of Hormuz as he and his administration are of the opinion that it hurts Iran more than the US.

This is the scenario that traders on prediction markets started to increasingly price in since last week and the one that we highlighted here based on what we saw on the markets.

Prediction markets once again prove to be an invaluable source of accurate forecasts of global events. Let's see what else they can show us.

Iran Tracker

#1 Peace

Chances of peace remain flat on the news, confirming that the scenario of a prolonged ceasefire with a double blockade was already priced in.

However, various reports put Iran's oil storage capacity at anything between days to months, indicating that no one really knows how long the regime can sustain the blockade. Assuming the truth lies somewhere in the middle (as the extremes are usually propaganda of both sides), the economic effects of the blockade will only start to show up in 3-6 months or later.

If this assessment proves to be correct, we should start to see a gradual decrease in Yes price on this market, which is already down on the week:

#2 The Strait Of Hormuz

Chances of traffic normalization in the Strait of Hormuz are also flat on the news.

And with each week of the double blockade, they will continue to go down. As the economic pain increases for both sides, we should see paper energy prices climb higher as they slowly need to converge with the price of the physical contracts:

For now we are back above $100 per barrel on all benchmarks:

#3 Boots On The Ground

Invasion market also remains flat since Monday.

As the reality that traders priced in during the last days and weeks materializes and no other alternative is obvious, traders simply wait to see how the double blockade will affect both sides of the conflict.

#4 Regional Expansion

Contrary to other markets, chances of a regional expansion of the conflict lowered on the news.

Traders must expect this state of equilibrium to last, however if the reports on lower Iranian storage capacity are true, it might be forced to engage the Houthis to accelerate economic pain through the blockade of the Bab-el-Mandeb Strait. This is surely a market to monitor as days go by.

#5 Iran Regime Fall

Ultimately, the regime is in no more risk of collapse. If anything, this suggests that our assessment on Iran still having options to accelerate pain is correct.

This is another market to watch closely as days go by and possible signs of pain start to emerge.

Wrap up

The no war, but no peace scenario is here. Pretty soon we will start to see the effects of the double blockade globally and prediction markets offer the better window into the global situation in the coming months.

Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you tomorrow for another Morning Brief!

This is not official investment or life advice. Do your own research. This are only my opinions and I encourage anyone to do their own research before putting any money anywhere.