Key Takeaways:
President Donald Trump said a deal with Iran remains possible even as his administration moves to impose a 20% toll on Strait of Hormuz transit, a waterway that carried one-fifth of the world's oil before the conflict.
"We want to get compensated for the protection we're providing," Trump said Sunday, referring to countries that receive US assistance for maritime security in the strait. "I believe a deal is possible."
The comments come as Iran's Foreign Ministry declared it will not uphold its obligations under the June 19 memorandum of understanding with the US, citing American non-compliance. Prediction markets now price just 2.1% odds of a nuclear deal by Aug. 13, down from elevated levels earlier this month. The probability of Iran formally withdrawing from MOU negotiations by July 31 stands at 17.5%, up from 8% a week ago, according to Vera data.
The Strait of Hormuz chokepoint handled about 20% of global oil and natural gas flows before Iran asserted control after the conflict began in February. Any sustained disruption — whether through Iranian mines, US tolls, or military escalation — risks pushing crude prices higher while squeezing shipping margins for tanker operators and insurers alike.
Escalation Risks Mount on Both Sides
Iran has launched retaliatory strikes against US military assets in Qatar, Kuwait, Oman and Jordan following more than 140 US precision strikes that shattered the interim ceasefire. Yemen's Houthi rebels, acting on Iranian instructions, fired ballistic missiles toward Saudi Arabia — the first such attack since March 2022, according to British military intelligence. The E3 group of European foreign ministers condemned Iran's "heinous attacks on merchant shipping" and called for the restoration of the ceasefire.
Market Pricing Reflects Diminished Diplomatic Prospects
The last time US-Iran tensions reached this level — during the 2019-2020 tanker attacks and Soleimani assassination — Brent crude spiked 15% in two weeks while shipping insurance premiums for Gulf transit surged tenfold. Current prediction market pricing suggests participants view the latest military actions as inconsistent with a near-term diplomatic resolution. The odds for a nuclear deal by Sept. 30 stand at roughly 5%, Vera data show, implying markets expect the conflict to persist through at least the third quarter.
If Iran follows through on its threat to withdraw from the MOU, analysts expect an immediate escalation involving Israel, Saudi Arabia and potentially the UAE, according to one British military intelligence expert cited by the Mirror. Trump has declared US forces will reinstate the Iranian blockade, stopping Iranian ships from entering or leaving the strait, while charging a 20% toll on eligible cargo to cover "any and all costs necessary to do the job of providing safety and security."
This article is for informational purposes only and does not constitute investment advice.
