Bets on a U.S.-Iran Hormuz deal swing again, but one this month still looks unlikely

Traders still see an official U.S.-Iran agreement on Strait of Hormuz shipping as unlikely this month. Expectations are a touch lower than Monday's peak, a nudge that leaves the outlook where it was. The reason for the latest swings is not clear, and this story will be updated if one emerges.

The path has been choppy. Expectations rose in the first week of October, fell back on Oct. 9 and 10, then recovered. From Oct. 14 through Oct. 16 they slid until a deal looked like a long shot. They bounced on Saturday, jumped on Monday, and gave back much of that gain overnight. On Tuesday morning they dipped again, then rebounded sharply around midday, ending a little below Monday's high.

The most recent identified cause concerns the earlier rise, not Tuesday's swings. On Oct. 18, Iranian Foreign Minister Abbas Araghchi said Tehran's seven-day proposal to reopen the strait was still on the table, Reuters and the Iraqi News Agency reported. He said the strait could reopen on the sixth day if the United States met Iran's conditions. That repeated an existing offer. It did not confirm U.S. acceptance.

The proposal dates to September. Iran offered to reopen the strait and resume nuclear talks if Washington lifted its naval blockade of Iranian ports, waived oil sanctions and observed a regional ceasefire. President Donald Trump rejected it publicly on Sept. 26, though Qatar and other mediators kept passing messages. Iran says it received U.S. feedback and is reviewing it. On Oct. 11, Iran's security chief called the U.S. response insufficient.

The security picture has worsened. Two Singapore-registered container ships were struck in the strait on Oct. 13 and 14, and one sank. The United Kingdom Maritime Trade Operations counted 12 attacks in the region in the week covered by its Oct. 16 overview, 10 of them in the strait. Reporting does not show that these attacks caused the recent swings.

Other bets point the same way. Traders see a deal by early November as unlikely, and a deal by the end of November or by year-end as unlikely too. They think the most probable outcome is that no agreement arrives by Dec. 31. A U.S. announcement ending the blockade this month looks like a long shot. A continued U.S.-Iran ceasefire through October looks likely.

No agreement, signing or negotiating session is scheduled. For the outcome to count, both governments would have to announce acceptance of the same official agreement. Continued talks or a one-sided proposal would not be enough.