Oil Contracts Surge as Strait of Hormuz Disruption Priced In
Crude oil prediction markets are repricing sharply higher, with the probability of oil hitting $105 by end of June rising 15¢ to 43¢. The Strait of Hormuz return-to-normal contracts remain deeply out of the money, confirming a supply disruption premium is being built in.
Key takeaways
- 01
Crude oil prediction markets are repricing sharply higher, with the probability of oil hitting $105 by end of June rising 15¢ to 43¢.
- 02
The Strait of Hormuz return-to-normal contracts remain deeply out of the money, confirming a supply disruption premium is being built in.
- 03
The Iran crisis is directly impacting oil markets, with traders using prediction markets to gauge the likely path of crude prices.
Full analysis
The Iran crisis is directly impacting oil markets, with traders using prediction markets to gauge the likely path of crude prices. The contract for 'Will Crude Oil (CL) hit $105 by end of June' (0x86c4455035d81c5121) saw a 15¢ jump to 43¢, while the $110 target (0x82033ffc908562008e) rose 7¢ to 24¢. This reflects a building consensus that oil is heading significantly higher. Conversely, the probability of oil falling to $85 (0xa4c71c6f43ceb1dec4) plummeted 19¢ to 42¢, as bearish scenarios are ruled out.
The core driver is the potential disruption to shipping through the Strait of Hormuz, a critical chokepoint for global oil supplies. The contract for 'Strait of Hormuz traffic returns to normal by end of June' (0x348cd9adf4f6855f58) trades at just 10¢, down 5¢, indicating that traders expect the disruption to persist. The longer-dated contract for return to normal by July 31 (0xb8e6d129a06d0ccb21) is at 28¢, also down 2¢. The 'Trump announces US blockade of Hormuz lifted by June 30' contract (0xd4ce84960dce38aa4a5) is at 34¢, down 2¢, suggesting the market does not expect a quick resolution.
Traders should monitor these contracts closely. The combination of rising probability for higher oil prices and declining probability for a Hormuz resolution creates a clear bullish signal for oil-related assets. The $120 target (0xba8af64c1b08f322ca) is at 12¢ (up 2¢) and $140 target (0x0443a503a38b90446c) at 3¢ (up 1¢), showing that extreme scenarios are also gaining traction. The key is to watch the daily changes in the Hormuz and oil price target contracts as the geopolitical situation evolves.
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