Iran’s Revolutionary Guard has re-closed the Strait of Hormuz, a strategic chokepoint through which about 20% of the world’s crude oil passes, sending Brent crude prices up 2% to $86.44 per barrel. The move comes amid escalating tensions between Iran and the United States, adding to supply concerns that have already been heightened by the Federal Reserve’s hawkish stance on interest rates.
Oil price bets shift higher
Prediction markets are now pricing a 26.5% probability that West Texas Intermediate crude will hit $90 per barrel in July, reflecting growing fears of prolonged supply disruptions. In contrast, the chance that Strait of Hormuz traffic returns to normal by July 31 is seen as very low, at just 1.4% YES. These odds suggest traders expect the geopolitical standoff to persist, keeping upward pressure on energy prices.
The closure of the waterway, which handles roughly a fifth of global oil shipments, has immediate implications for inflation and central bank policy. The Federal Reserve’s recent signals that it will slow the pace of rate cuts have already complicated the economic outlook, and higher crude costs could reinforce that cautious stance.
What to watch next
Market participants will be closely watching for any diplomatic signals from Washington or Tehran that could alter the Strait’s status. OPEC+ production decisions and the Fed’s next rate move are also key factors that could shift oil price expectations. For now, the combination of military action and monetary policy uncertainty is keeping crude markets on edge.